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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549   FORM 10-K    ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 OR  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
 TO COMMISSION FILE NUMBER: 814-00849   SLR SENIOR INVESTMENT CORP. (Exact name of registrant as specified in its charter)    Maryland

27-4288022(State of Incorporation)

(I.R.S. Employer
Identification Number)500 Park Avenue
New York, N.Y.

10022(Address of principal executive offices)

(Zip Code) Registrants telephone number, including area code:
(212) 993-1670 Securities registered pursuant to Section 12(b) of the Act:  Title of Each Class

Trading
Symbol

Name of Each Exchange
on Which RegisteredCommon Stock, par value $0.01 per share

SUNS

The NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None   Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes  ☐    No  ☒ Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  ☒    No  ☐ Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).    Yes  ☐    No  ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule 12b-2 of the Exchange Act.  Large accelerated filer

☐

Accelerated filer

☒Non-accelerated filer

☐

Smaller Reporting Company

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.    Yes  ☐    No  ☒ Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act)    Yes  ☐    No  ☒ The aggregate market value of common stock held by non-affiliates of the Registrant on June 30,
2021 based on the closing price on that date of $15.19 on the NASDAQ Global Select Market was approximately $229.3 million. For the purposes of calculating this amount only, all directors and executive officers of the Registrant have been
treated as affiliates. There were 16,049,034 shares of the Registrants common stock outstanding as of February 25, 2022.




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SLR SENIOR INVESTMENT CORP. FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 TABLE OF CONTENTS  PagePART IItem 1.

Business


1Item 1A.

Risk Factors


28Item 1B.

Unresolved Staff Comments


70Item 2.

Properties


70Item 3.

Legal Proceedings


70Item 4.

Mine Safety Disclosures


71PART IIItem 5.

Market for Registrants Common Equity, Related Stockholder Matters
 and Issuer Purchases of Equity Securities


72Item 6.

Reserved


77Item 7.

Managements Discussion and Analysis of Financial Condition
 and Results of Operations


77Item 7A.

Quantitative and Qualitative Disclosures about Market
Risk


96Item 8.

Financial Statements and Supplementary Data


96Item 9.

Changes in and Disagreements With Accountants on Accounting and
 Financial Disclosure


128Item 9A.

Controls and Procedures


128Item 9B.

Other Information


128Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections


128PART IIIItem 10.

Directors, Executive Officers and Corporate
Governance


129Item 11.

Executive Compensation


134Item 12.

Security Ownership of Certain Beneficial Owners and Management and
 Related Stockholder Matters


136Item 13.

Certain Relationships and Related Transactions, and Director Independence


137Item 14.

Principal Accountant Fees and Services


140PART IVItem 15.

Exhibits and Financial Statement Schedules


142Item 16.

Form 10-K
Summary


144Signatures


145




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PART I  Item 1.
Business SLR Senior Investment Corp. (SLR Senior, the Company, SUNS, we, us or
our) (f/k/a Solar Senior Capital Ltd.), a Maryland corporation formed in December 2010, is a closed-end, externally managed, non-diversified management
investment company that has elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). Furthermore, as the Company is an investment company, it
continues to apply the guidance in the Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) Topic 946. In addition, for U.S federal income tax purposes, we have elected, and intend to qualify
annually, to be treated as a regulated investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). On February 24, 2011, we priced our initial public offering, selling 9.0 million shares of our common stock, including the
underwriters over-allotment, raising approximately $168 million in net proceeds. Concurrent with this offering, Solar Senior Capital Investors LLC, an entity controlled by Michael S. Gross, our Chairman,
Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, purchased an additional 500,000 shares of our
common stock through a private placement transaction exempt from registration under the Securities Act of 1933, as amended, or the Securities Act (the Concurrent Private Placement), raising another $10 million. We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the
investment opportunities are most attractive. We define middle market to refer to companies with annual revenues typically between $50 million and $1 billion. Our investment objective is to seek to maximize current income
consistent with the preservation of capital. We seek to achieve our investment objective by directly and indirectly investing primarily in senior loans, including first lien, and second lien debt instruments, made to private middle-market companies
whose debt is rated below investment grade, which we refer to collectively as senior loans. We may also invest directly in the debt and equity securities of public companies that are thinly traded or in other equity and equity related
securities and such investments may not be limited to any minimum or maximum market capitalization. In addition, we may invest in foreign markets, including emerging markets. Under normal market conditions, at least 80% of the value of our net
assets (including the amount of any borrowings for investment purposes) will be invested directly or indirectly in senior loans. Senior loans typically pay interest at rates which are determined periodically on the basis of a floating base lending
rate, primarily LIBOR, plus a premium. Senior loans in which we invest are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in
various industries and geographical regions. Senior loans typically are rated below investment grade. In addition, some of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable to payoff its
debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity. Upon such an occurrence, we may realize in a loss or a substantial amount of unpaid
principal and interest due upon maturity. Securities rated below investment grade are speculative and are often referred to as leveraged loans, high yield or junk securities, and may be considered high
risk compared to debt instruments that are rated investment grade. While the Company does not typically seek to invest in traditional equity securities as part of its investment objective, the Company may occasionally acquire some equity
securities in connection with senior loan investments and in certain other unique circumstances, such as the Companys equity investments in SLR Healthcare ABL (SLR Healthcare) and SLR Business Credit. We invest in senior loans made primarily to private, leveraged middle-market companies with approximately $20 million to
$100 million of earnings before income taxes, depreciation and amortization (EBITDA). Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our
direct investments in individual securities generally range between $5 million and $30 million each, although we expect that this investment size will vary with the size of our capital base and/or strategic initiatives. In addition, we may
invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to  1




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enhance our overall returns. These opportunistic investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged
companies located in select countries outside of the United States. We may invest up to 30% of our total assets in such opportunistic investments, including loans issued by non-U.S. issuers, subject to
compliance with our regulatory obligations as a BDC under the 1940 Act. Our investment activities are managed by SLR Capital Partners, LLC (SLR Capital Partners or the Investment Adviser) and supervised by our board of
directors (the Board or board of directors), a majority of whom are non-interested, as such term is defined in Section 2(a)(19) of the 1940 Act. SLR Capital Management, LLC
(SLR Capital Management) provides the administrative services necessary for us to operate. As of December 31, 2021, our
investment portfolio totaled $403.1 million and our net asset value was $247.7 million. Our portfolio was comprised of debt and equity investments in 50 portfolio companies. SLR Capital Partners SLR Capital
Partners, our investment adviser, is controlled and led by Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief
Executive Officer and Chief Operating Officer. They are supported by a team of investment professionals. SLR Capital Partners investment team has extensive experience in leveraged lending and private equity, as well as significant contacts
with financial sponsors. In addition, at December 31, 2021, SLR Capital Partners serves as investment adviser to private funds and
managed accounts as well as to SLR Investment Corp., another publicly traded BDC that primarily invests in leveraged middle market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity
securities, SCP Private Credit Income BDC LLC, an unlisted BDC that primarily invests in first lien loans to upper middle market private leveraged companies and SLR HC BDC LLC, an unlisted BDC that primarily invests in first lien healthcare cash
flow loans and life science loans. Through December 31, 2021, the investment team led by Messrs. Gross and Spohler has invested approximately $12.5 billion in more than 450 different portfolio companies involving over 200 different
financial sponsors. As of February 25, 2022, Mr. Gross and Mr. Spohler beneficially owned, either directly or indirectly, approximately 6.3% of our outstanding common stock. Mr. Gross has over 25 years of experience in the private equity, distressed debt and mezzanine i.e., actually or structurally
subordinated lending businesses and has been involved in originating, structuring, negotiating, consummating and managing private equity, distressed debt and mezzanine lending transactions. Prior to his current role as our Chairman, Co-Chief Executive Officer and President, Mr. Gross founded Apollo Investment Corporation, a publicly traded BDC. He served as its chairman from February 2004 to July 2006 and its chief executive officer from
February 2004 to February 2006. Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004, built a dedicated investment team and infrastructure and
invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors. Mr. Gross is also a founder and a former senior partner of Apollo Management, L.P., a leading private equity firm. During
his tenure at Apollo Management, L.P., Mr. Gross was a member of the investment committee that was responsible for overseeing more than $13 billion of investments in over 150 companies. Mr. Gross also has served on the boards of directors of more than 20 public and private companies. As a result, Mr. Gross has
developed an extensive network of private equity sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant
business opportunities. We also rely on the over 25 years of experience of Mr. Spohler, who has served as our Chief Operating
Officer and a partner of SLR Capital Partners since its inception and as Co-Chief Executive Officer since June 2019. Previously, Mr. Spohler was a managing director and a former co-head of U.S. Leveraged Finance for  2




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CIBC World Markets. He held numerous senior roles at CIBC World Markets, including serving on the U.S. Management Committee, Global Executive Committee and the Deals Committee, which approves all
of CIBC World Markets U.S. corporate finance debt capital decisions. During Mr. Spohlers tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets below
investment grade loan portfolio in the United States. As a co-head of U.S. Leveraged Finance, Mr. Spohler oversaw over 300 capital raising and merger and acquisition transactions, comprising over
$40 billion in market capitalization. SLR Capital Partners senior investment professionals have been active participants in
the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of senior secured, distressed and mezzanine debt as well as other investment types. The depth of their prior experience and credit
market expertise has led them through various stages of the economic cycle as well as several market disruptions. SLR Capital Management Pursuant to an administration agreement (the Administration Agreement), SLR Capital Management furnishes us with office facilities,
equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, SLR Capital Management also performs, or oversees the performance of, our required administrative services, which include, among
other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders. In addition, SLR Capital Management assists us in determining and publishing our net asset value, oversees the
preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others.
SLR Capital Management also provides managerial assistance, if any, on our behalf to those portfolio companies that request such assistance. License
Agreement We have entered into a license agreement with SLR Capital Partners pursuant to which SLR Capital Partners has agreed to
grant us a non-exclusive, royalty-free license to use the names SLR Senior and SOLAR Under this agreement, we have a right to use the SLR Senior and names for so long as the Investment
Advisory and Management Agreement with our investment adviser is in effect. Other than with respect to this limited license, we will have no legal right to the SLR Senior or SOLAR names. Market Opportunity SLR Senior invests
directly and indirectly in senior loans of private middle-market leveraged companies organized and located primarily in the United States. We believe that the size of this market, coupled with leveraged companies need for flexible sources of
capital at attractive terms and rates, creates an attractive investment environment for us.  

Middle-market companies continue to face increasing difficulty in accessing the capital markets. While
many middle-market companies were formerly able to raise funds by issuing high-yield bonds, we believe this approach to financing has become more difficult in recent years as institutional investors have sought to invest in larger, more liquid
offerings. In addition, many private finance companies that historically financed their lending and investing activities through securitization transactions have lost that source of funding and reduced lending significantly. Moreover, consolidation
of lenders and market participants and the illiquid nature of investments have resulted in fewer middle-market lenders and market participants.  

There is a large pool of uninvested private equity capital likely to seek additional senior debt capital to
support their investments. We believe there is more than $600 billion of uninvested private equity  3




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seeking debt financing to support acquisitions. We expect that middle-market private equity firms will continue to invest in middle-market companies and that those private equity firms will seek
to support their investments with senior loans from other sources such as SLR Senior.  

The significant amount of leveraged loans maturing through 2024 should provide additional demand for
capital. A high volume of financings are expected to mature over the next few years. We believe that this supply of prospective lending opportunities coupled with a lack of available credit in the middle-market lending space may offer attractive
risk-adjusted returns to investors. Risk-adjusted return compares returns against the amount of risk incurred. The term risk-adjusted return does not imply that an investment is no risk or low risk.  

Investing in private middle-market senior secured debt provides an attractive risk reward profile. In
general, terms for illiquid, middle-market subordinated debt have been more attractive than those for larger corporations which are typically more liquid. We believe this is because fewer institutions are able to invest in illiquid asset classes. Therefore, we believe that there is an opportunity to invest in senior loans of leveraged companies and that we are
well positioned to serve this market. Competitive Advantages and Strategy We believe that we have the following competitive advantages over other providers of financing to leveraged companies. Management Expertise As managing
partner, Mr. Gross has principal management responsibility for SLR Capital Partners, to which he currently dedicates substantially all of his time. Mr. Gross has over 25 years of experience in leveraged finance, private equity and
distressed debt investing. Mr. Spohler, our Co-Chief Executive Officer, Chief Operating Officer and a partner of SLR Capital Partners, has over 25 years of experience in evaluating and executing leverage
finance transactions. Proprietary Sourcing and Origination We believe that SLR Capital Partners senior investment professionals longstanding relationships with financial sponsors, commercial
and investment banks, management teams and other financial intermediaries provide us with a strong pipeline of origination opportunities. We expect to continue leveraging the over 100 relationships with middle-market sponsors that SLR Capital
Partners investment team established while sourcing and originating investments for SLR Senior, which gives us access to deals that are not available through large syndication processes. Versatile Transaction Structuring and Flexibility of Capital We believe SLR Capital Partners senior investment teams broad expertise and ability to draw upon its extensive experience enable us
to identify, assess and structure investments successfully and to manage potential risk and return at all stages of the economic cycle. The attempt to manage risk does not imply low risk or no risk. While we are subject to significant regulation as
a BDC, we are not subject to many of the regulatory limitations that govern traditional lending institutions such as banks. As a result, we believe that we can be more flexible than such lending institutions in selecting and structuring investments,
adjusting investment criteria and building transaction structures. Emphasis on Achieving Strong Risk-Adjusted Returns SLR Capital Partners uses a structured investment and risk management process that emphasizes research and analysis. SLR Capital Partners seeks
to build our portfolio on a bottom-up basis, choosing and sizing  4




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individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility, correlation with the existing portfolio and liquidity. At the same
time, SLR Capital Partners takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio of investments and limiting issuer and industry concentration. We do
not pursue short-term origination targets. We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long term. We believe it is critical to conduct extensive due diligence on
investment targets. In evaluating new investments we, through SLR Capital Partners, conduct a rigorous due diligence process. Dedication of
Resources to Industries with Substantial Information Flow We dedicate our investing resources to industries characterized by
strong cash flow and in which SLR Capital Partners investment professionals have deep investment experience. As a result of their investment experience, Messrs. Gross and Spohler, together with SLR Capital Partners other investment
professionals, have long-term relationships with management consultants and management teams in the industries we target, as well as substantial information concerning those industries. Longer Investment Horizon Unlike
private equity and venture capital funds, we are not subject to standard periodic capital return requirements. Such requirements typically stipulate that the capital of these funds, together with any capital gains on such invested funds, can only be
invested once and must be returned to investors after a pre-agreed time period. We believe that our flexibility to make investments with a long-term view and without the capital return requirements of
traditional private investment vehicles enables us to invest in private middle-market senior debt, which we believe provides a more attractive investment profile than the liquid senior debt market for larger companies. We also believe our longer
investment horizon enables us to be a better long-term partner for our portfolio companies. Investments SLR Senior seeks to create a diverse portfolio of senior loans by investing approximately $5 million to $30 million of capital, on
average, in the individual securities of leveraged companies, including private middle-market companies. We expect that this investment size will vary proportionately with the size of our capital base and/or strategic initiatives. We may also invest
in the debt and equity of public companies that are thinly traded. Under normal market conditions, at least 80% of the value of our net assets (including the amount of any borrowings for investment purposes) will be invested directly or indirectly
in senior loans. Senior loans typically pay interest at rates which are determined periodically on the basis of a floating base lending
rate, primarily LIBOR, plus a spread or premium. Senior loans in which we invest are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which
operate in various industries and geographical regions. Senior loans typically are rated below investment grade. Securities rated below investment grade are speculative and are often referred to as leveraged loans, high yield
or junk securities, and may be considered high risk compared to debt instruments that are rated investment grade. Senior loans, however are generally less risky than subordinated debt, bearing lower leverage and higher
recovery statistics. In addition, many of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity. Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due upon maturity. In addition to senior loans, we may invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are
intended to enhance our returns to stockholders. These investments may include similar direct investments in public companies that are not thinly traded and securities of leveraged companies  5




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located in select countries outside of the United States. We may invest up to 30% of our total assets in such opportunistic investments, including loans issued by
non-U.S. issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act. We currently borrow funds under our credit facilities and may borrow additional funds to make investments. As a result, we are exposed to the
risks of leverage, which may be considered a speculative investment technique. The use of leverage magnifies the potential for loss on amounts invested and therefore increases the risks associated with investing in our securities. In addition, the
costs associated with our borrowings, including any increase in management fees payable to our investment adviser, SLR Capital Partners, will be borne by our common stockholders. Additionally, we may in the future seek to securitize our loans to generate cash for funding new investments. To securitize loans, we may
create a wholly owned subsidiary and contribute a pool of loans to the subsidiary. This could include the sale of interests in the subsidiary on a non-recourse basis to purchasers who we would expect to be
willing to accept a lower interest rate to invest in investment grade loan pools, and we would retain a portion of the equity in the securitized pool of loans. Moreover, we may acquire investments in the secondary market and, in analyzing such investments, we will employ a substantially similar
analytical process as we use for our primary investments. We may utilize instruments such as forward contracts, currency options and
interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our
portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same
developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be possible to
hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect
correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully
or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not entirely
related to currency fluctuations. Our principal focus is to provide senior loans, including first lien loans, to leveraged private
middle-market companies in a variety of industries. We generally seek to target companies that generate positive cash flows and/or have substantiated assets that serve our loans. We generally seek to invest in companies from the broad variety of
industries in which our investment adviser has direct expertise. The following is a representative list of the industries in which we may invest.    Aerospace & Defense

  Hotels, Restaurants & Leisure  Air Freight & Logistics

  Household & Personal Products  Airlines

  Industrial Conglomerates  Asset Management

  Insurance  Automobiles

  Internet & Catalog Retail  Auto Components

  Internet Services & Infrastructure  Auto Parts & Equipment

  IT Services  Biotechnology

  Leisure Equipment & Products  Building Products

  Life Sciences Tools & Services  Capital Markets

  Machinery  Chemicals

  Media  6




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  Commercial Services & Supplies

  Metals & Mining  Communications Equipment

  Multiline Retail  Construction & Engineering

  Multi-Sector Holdings  Consumer Finance

  Oil, Gas & Consumable Fuels  Containers & Packaging

  Packaged Foods & Meats  Distributors

  Paper & Forest Products  Diversified Consumer Services

  Personal Products  Diversified Financial Services

  Pharmaceuticals  Diversified Real Estate Activities

  Professional Services  Diversified Telecommunications Services

  Research & Consulting Services  Education Services

  Road & Rail  Energy Equipment & Services

  Software  Food Products

  Specialty Retail  Footwear

  Textiles, Apparel & Luxury Goods  Health Care Equipment & Supplies

  Thrifts & Mortgage Finance  Health Care Facilities

  Trading Companies & Distributors  Health Care Providers & Services

  Utilities  Health Care Technology

  Wireless Telecommunications Services We may also invest in other industries if we are presented with attractive opportunities. We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds. We
may also participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is SLR Capital Partners, or an investment adviser controlling, controlled by or under
common control with SLR Capital Partners and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act), in a manner consistent with our investment objective, positions, policies,
strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions of the most recent exemptive order obtained from the SEC on June 13, 2017 (the Exemptive Order). Pursuant to
the Exemptive Order, we are permitted to co-invest with our affiliates if a required majority (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain
conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the
potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on
the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment
objective and strategies. At December 31, 2021, our portfolio consisted of 50 portfolio companies and was invested 71.2% directly in
senior secured loans and 28.8% in common equity/equity interests/warrants (of which 8.9% is SLR Healthcare ABL and 19.8% is SLR Business Credit, through which the Company indirectly invests in senior secured loans), in each case, measured at fair
value. We expect that our portfolio will continue to primarily include senior secured loans. While our primary investment objective is to
maximize current income through direct and indirect investments in U.S. senior secured loans, and we may also invest a portion of the portfolio in opportunistic investments, including foreign securities.  7




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Listed below are our top ten portfolio companies and industries based on their fair value
and represented as a percentage of total assets as of December 31, 2021 and 2020: TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF
DECEMBER 31, 2021  Portfolio Company

% of TotalAssetsSLR Business Credit*


14.0
%SLR Healthcare ABL*.


6.3
%World Insurance Associates, LLC


2.6
%Community Brands ParentCo, LLC.


2.4
%BayMark Health Services, Inc


2.1
%KORE Wireless Group, Inc


2.1
%Drilling Info Holdings, Inc


2.0
%GSM Acquisition Corp


1.9
%Foundation Consumer Brands, LLC.


1.9
%Logix Holding Company, LLC


1.9
%  *
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies
of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment.  Industry

% of TotalAssetsDiversified Financial Services


20.2
%Health Care Providers & Services


11.4
%Insurance


6.6
%Building Products


3.5
%Trading Companies & Distributors


2.8
%Communications Equipment


2.5
%Software


2.4
%Pharmaceuticals


2.3
%Health Care Equipment & Supplies


2.3
%Diversified Consumer Services


2.2
% TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2020  Portfolio Company

% of TotalAssetsNorth Mill Holdco LLC*


9.0
%Gemino Healthcare Finance LLC*.


5.5
%Galway Partners Holdings, LLC (fka Edgewood)


2.6
%Confie Seguros Holding II Co.


2.2
%Ministry Brands, LLC.


2.1
%American Teleconferencing Services, Ltd


2.0
%KORE Wireless Group, Inc.


1.8
%Drilling Info Holdings, Inc


1.7
%Aegis Toxicology Sciences Corporation.


1.6
%Logix Holding Company, LLC


1.6
%  *
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies
of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment.  8




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Industry

% of TotalAssetsDiversified Financial Services


14.5
%Insurance


8.2
%  Portfolio Company

% of TotalAssetsHealth Care Providers & Services


6.7
%Software


3.8
%Communications Equipment


3.5
%Professional Services


2.5
%Wireless Telecommunication Services


1.8
%Pharmaceuticals


1.8
%IT Services


1.7
%Building Products


1.6
% Set forth below is a brief description of each portfolio company in which we have made an investment that
represents greater than 5% of our total assets as of December 31, 2021. SLR Business Credit We acquired 100% of the equity interests of North Mill Capital LLC (NMC) on October 20, 2017. NMC is a leading asset-backed
lending commercial finance company that provides senior secured asset-backed financings to U.S.
based small-to-medium-sized businesses primarily in the manufacturing, services and distribution industries. We
invested approximately $51 million to effect the transaction. Subsequently, the Company contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, the Company and ESP SSC Corporation contributed their
equity interests to North Mill LLC. On May 1, 2018, North Mill LLC merged with and into NMC, with NMC being the surviving company. The Company and ESP SSC Corporation own 99% and 1% of the equity interests of NMC, respectively.
The management team of NMC continues to lead NMC. NMC currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. On June 28, 2019, North Mill Holdco LLC (NM Holdco), a newly
formed entity and ESP SSC Corporation acquired Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and medium-sized businesses. As part of this transaction, the
Companys 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15.5 million transaction was financed with borrowings on NMCs credit facility. Effective February 25, 2021, NMC and its related
companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of
$66.7 million was financed with equity from the Company of $19.0 million and borrowings on NMCs credit facility of $47.7 million. SLR Healthcare ABL SLR Healthcare (f/k/a
Gemino Healthcare Finance LLC) is a commercial finance business focused on originating, underwriting, and managing financing solutions for small to mid-size companies operating in the healthcare industry. SLR
Healthcares primary financing products today include revolving lines of credit secured by the borrowers accounts receivable, including receivables from Medicare, Medicaid, and private health insurance companies as well as senior cash
flow term loans secured by all other assets, often with a pledge of equity or personal guarantee. The company has processes in place to source, underwrite and monitor portfolio companies. SLR Healthcare competes against an assortment of regional and
local banks as well as specialized commercial finance companies. The companys performance is susceptible to changes in healthcare regulation and interest rates. The company is headquartered in Philadelphia, Pennsylvania and has a satellite
office in Atlanta, Georgia.  9




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Investment Selection Process SLR Capital Partners is committed to and utilizes a value-oriented investment philosophy with a focus on the preservation of capital and a
commitment to managing downside exposure. Portfolio Company Characteristics We have identified several criteria that we believe are important in identifying and investing in prospective portfolio companies. These
criteria provide general guidelines for our investment decisions; however, not all of these criteria will be met by each prospective portfolio company in which we choose to invest. Stable Earnings and Strong Free Cash Flow. We seek to invest in companies who have demonstrated stable earnings through economic
cycles. We target companies that can de-lever through consistent generation of cash flows rather than relying solely on growth to service and repay our loans. Value Orientation. Our investment philosophy places a premium on fundamental analysis from an investors perspective and
has a distinct value orientation. We focus on companies in which we can invest at relatively low multiples of operating cash flow and that are profitable at the time of investment on an operating cash flow basis. Value of Assets. The prospective value of the assets, if any, that collateralizes the loans in which we invest, is an important
factor in our credit analysis. Our analysis emphasizes both tangible assets, such as accounts receivable, inventory, equipment and real estate, and intangible assets, such as intellectual property, customer lists, networks and databases. In some of
our transactions, the companys fundings may be derived from a borrowing base determined by the value of the companys assets. Strong Competitive Position in Industry. We seek to invest in target companies that have developed leading market positions
within their respective markets and are well positioned to capitalize on growth opportunities. We seek companies that demonstrate significant competitive advantages versus their competitors, which we believe should help to protect their market
position and profitability. Diversified Customer and Supplier Base. We seek to invest in businesses that have a diversified
customer and supplier base. We believe that companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively
impact their customers, suppliers and competitors. Exit Strategy. We predominantly invest in companies which provide
multiple alternatives for an eventual exit. We look for opportunities that provide an exit typically within three years of the initial capital commitment. We generally seek companies that we believe have or will provide a steady stream of cash flow to repay our loans and reinvest in their
respective businesses. We believe that such internally generated cash flow, leading to the payment of our interest, and the repayment of our principal represent a key means by which we will be able to exit from our investments over time. In addition, we also seek to invest in companies whose business models and expected future cash flows or cash positions offer attractive exit
possibilities. These companies include candidates for strategic acquisition by other industry participants and companies that may repay our investments through an initial public offering of common stock or another capital market transaction. We
underwrite our investments on a held-to-maturity basis, but expensive capital is often repaid prior to stated maturity. Experienced and Committed Management. We generally require that portfolio companies have an experienced management team. We also
require portfolio companies have in place proper incentives to induce management to succeed and to act in concert with our interests as investors, including having significant equity interests.  10




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Strong Sponsorship. We generally aim to invest alongside other sophisticated
investors. We typically seek to partner with successful financial sponsors who have historically generated high returns. We believe that investing in these sponsors portfolio companies enables us to benefit from their direct involvement and
due diligence. SLR Seniors investment team works in concert with sponsors to proactively manage investment opportunities by acting
as a partner throughout the investment process. We actively focus on the middle-market financial sponsor community, with a particular focus on the upper-end of the middle-market (sponsors with equity funds of
$500 million to $5 billion). We favor such sponsors because they typically:  

buy larger companies with strong business franchises;  

invest significant amounts of equity in their portfolio companies;  

value flexibility and creativity in structuring their transactions;  

possess longer track records over multiple investment funds;  

have a deeper management bench;  

have better ability to withstand downturns; and  

possess the ability to support portfolio companies with additional capital. We divide our coverage of these sponsors among our more senior investment professionals, who are responsible for day-to-day interaction with financial sponsors. Our coverage approach aims to act proactively, consider all investments in the capital structure, provide quick feedback,
deliver on commitments, and are constructive throughout the life cycle of an investment. Due Diligence Our private equity approach to credit investing typically incorporates extensive in-depth
due diligence often alongside the private equity sponsor. In conducting due diligence, we will use publicly available information as well as information from relationships with former and current management teams, consultants, competitors and
investment bankers. We believe that our due diligence methodology allows us to screen a high volume of potential investment opportunities on a consistent and thorough basis. Our due diligence typically includes:  

review of historical and prospective financial information;  

review and valuation of assets;  

research relating to the companys management, industry, markets, products and services and competitors;  

on-site visits;  

discussions with management, employees, customers or vendors of the potential portfolio company;  

review of senior loan documents; and  

background investigations. We also expect to evaluate the private equity sponsor making the investment. Further, due to SLR Capital Partners considerable repeat
business with sponsors, we have direct experience with the management teams of many sponsors. A private equity sponsor is typically the controlling stockholder upon completion of an investment and as such is considered critical to the success of the
investment. The equity sponsor is evaluated along several key criteria, including:  

investment track record;  11




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

industry experience;  

capacity and willingness to provide additional financial support to the company through additional capital
contributions, if necessary; and  

reference checks. Throughout the due diligence process, a deal team is in constant dialogue with the management team of the company in which we are considering
to invest to ensure that any concerns are addressed as early as possible through the process and that unsuitable investments are filtered out before considerable time has been invested. Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the
investment present the investment opportunity to SLR Capital Partners investment committee, which then determines whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on our
behalf by attorneys and independent accountants prior to the closing of the investment, as well as other outside advisers, as appropriate. The
Investment Committee All new investments are required to be approved by a consensus of the investment committee of SLR Capital
Partners, which is led by Messrs. Gross and Spohler. The members of SLR Capital Partners investment committee receive no compensation from us. Such members may be employees or partners of SLR Capital Partners and may receive compensation or
profit distributions from SLR Capital Partners. Investment Structure Once we determine that a prospective portfolio company is suitable for investment, we will work with the management of that company and its
other capital providers, including senior, junior and equity capital providers, to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in the portfolio
companys capital structure. We seek to invest in portfolio companies primarily in the form of senior loans. These senior loans
typically have current cash pay interest with some amortization of principal. Interest is typically paid on a floating rate basis, often with a floor on the LIBOR rate. We generally seek to obtain security interests in the assets of our portfolio
companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first or second priority liens on the assets of a portfolio company. Typically, we expect that our senior loans will have final maturities of four to seven years. However, we also expect that our portfolio
companies often may repay these loans early, generally within three years from the date of initial investment. In some cases and when available, we seek to structure these loans with prepayment premiums to capture foregone interest. In the case of our senior secured loan investments, we seek to tailor the terms of the investment to the facts and circumstances of the
transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in
addition to seeking a senior position in the capital structure of our portfolio companies, we may be able to limit the downside potential of our investments by:  

requiring a total return on our investments (including both interest and potential capital appreciation) that
compensates us for credit risk;  

incorporating put rights and call protection into the investment structure; and  

negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility
in managing their businesses as possible, consistent with preservation of our capital. Such  12




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restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation
rights. Our investments may include equity features, such as warrants or options to buy a minority interest in the
portfolio company. Any warrants we receive with our debt securities generally require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. In
addition, we may from time to time make direct equity investments in portfolio companies. We generally seek to hold most of our
investments to maturity or repayment, but believe we have the ability to sell our investments earlier, including if a liquidity event takes place such as the sale or recapitalization of a portfolio company. Ongoing Relationships with Portfolio Companies SLR Capital Partners monitors our portfolio companies on an ongoing basis. SLR Capital Partners monitors the financial trends of each portfolio
company to determine if it is meeting its business plan and to assess the appropriate course of action for each company. SLR Capital
Partners has several methods of evaluating and monitoring the performance and fair value of our investments, which include the following:  

Assessment of success in adhering to each portfolio companys business plan and compliance with covenants;  

Periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic
sponsor, to discuss financial position, requirements and accomplishments;  

Comparisons to other SLR Senior invested portfolio companies in the industry, if any; and  

Review of monthly and quarterly financial statements, asset valuations, and financial projections for portfolio
companies. In addition to various risk management and monitoring tools, SLR Capital Partners also uses an investment
rating system to characterize and monitor our expected level of returns on each investment in our portfolio. We use an investment rating
scale of 1 to 4. The following is a description of the conditions associated with each investment rating:  Investment
Rating

Summary Description1

Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk factors are generally favorable (including a potential exit)2

Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk factors are neutral to favorable; all new investments are initially assessed a grade of 23

The portfolio company is performing below expectations, may be out of compliance with debt covenants, and requires procedures for closer monitoring4

The investment is performing well below expectations and is not anticipated to be repaid in full SLR Capital Partners monitors and, when appropriate, changes the investment ratings assigned to each
investment in our portfolio. As of December 31, 2021 and December 31, 2020, the weighted average investment rating on the fair market value of our portfolio was 2. In connection with our valuation process, SLR Capital Partners reviews
these investment ratings on a quarterly basis.  13




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Valuation Procedures We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with U.S. generally
accepted accounting principles (GAAP), and the 1940 Act. Our valuation procedures are set forth in more detail below: The
Company conducts the valuation of its assets in accordance with GAAP and the 1940 Act. The Company generally values its assets on a quarterly basis, or more frequently if required. Investments for which market quotations are readily available on an
exchange are valued at the closing price on the date of valuation. The Company may also obtain quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, management
determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the investment. If determined adequate, the Company uses the quote obtained. Debt investments with maturities of 60 days or less shall each be
valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be
valued at fair value as determined in good faith by or under the direction of the Board. Investments for which reliable market quotations
are not readily available or for which the pricing sources do not provide a valuation or methodology or provide a valuation or methodology that, in the judgment of the Investment Adviser or the Board does not represent fair value, each shall be
valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuations are discussed with senior management of the Investment
Adviser; (iii) independent valuation firms engaged by, or on behalf of, the Board will conduct independent appraisals and review the Investment Advisers preliminary valuations and make their own independent assessment for (a) each
portfolio investment that, when taken together with all other investments in the same portfolio company, exceeds 10% of estimated total assets, plus available borrowings, as of the end of the most recently completed fiscal quarter, and (b) each
portfolio investment that is presently in payment default and the Investment Adviser does not expect to reach an agreement with the portfolio company in the subsequent quarter; (iv) the Board will discuss the valuations and determine the fair
value of each investment in our portfolio in good faith based on the input of the Investment Adviser and, where appropriate, the respective independent valuation firm. The recommendation of fair value generally considers the following factors among others, as relevant: applicable market yields; the nature and
realizable value of any collateral; the portfolio companys ability to make payments; the portfolio companys earnings and discounted cash flow; the markets in which the issuer does business; and comparisons to publicly traded securities,
among others. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will
consider the pricing indicated by the external event to corroborate the valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may
differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. Investments are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, in accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946, may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other
relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a
single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing
our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and
realizable value of any collateral, the portfolio companys ability to make payments, its earnings and  14




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discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values,
among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the fiscal year ended December 31, 2021, there has been no change to the
Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process. Accounting
Standards Codification (ASC) Topic 820 classifies the inputs used to measure these fair values into the following hierarchy: Level1: Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the
measurement date. Level2: Quoted prices for similar assets or liabilities in active markets, or quoted prices
for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. Level3: Unobservable inputs for the asset or liability. In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the
lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The
exercise of judgment is based in part on our knowledge of the asset class and our prior experience. Determination of fair value involves
subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial
statements. Competition Our primary
competitors provide financing to middle-market companies and include other BDCs, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Additionally,
alternative investment vehicles, such as hedge funds, frequently invest in middle-market companies. As a result, competition for investment opportunities at middle-market companies can be intense. While many middle-market companies were previously
able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing is more difficult as implementation of U.S. and international financial reforms limits the capacity of large financial
institutions to hold non-investment grade leveraged loans on their balance sheets. We believe that many of these financial institutions have de-emphasized their service
and product offerings to middle-market companies in particular. Many of our competitors are substantially larger and have considerably
greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk
tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940
Act imposes on us as a business development company. We use the industry information available to Messrs. Gross and Spohler and the other investment professionals of SLR Capital Partners to assess investment risks and determine appropriate
pricing for our investments in portfolio companies. In addition, we believe that the relationships of Messrs. Gross and Spohler and the other senior investment professionals of our investment adviser enable us to learn about, and compete
effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest.  15




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Staffing We do not currently have any employees. Mr. Gross, our Chairman and Co-Chief Executive Officer,
and Mr. Spohler, our Co-Chief Operating Officer and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, SLR Capital Partners. In
addition, Mr. Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for SLR Capital Partners. Guy Talarico, our Chief Compliance Officer, is a Senior Managing Director of Foreside Consulting
Services, LLC, and performs his functions as our Chief Compliance Officer under the terms of an agreement between SLR Capital Management and Foreside Consulting Services, LLC. SLR Capital Management has retained Mr. Talarico and Foreside
Consulting Services, LLC pursuant to its obligations under our Administration Agreement. Our day-to-day investment operations are managed by SLR Capital Partners. Based upon its needs, SLR Capital Partners may hire additional investment professionals. In addition, we will reimburse SLR Capital
Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Companys chief compliance officer
and chief financial officer and their respective staffs. Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these
requirements affect us. For example:  

Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the
1934 Act), our Co-Chief Executive Officers and Chief Financial Officer must certify the accuracy of the consolidated financial statements contained in our periodic reports;  

Pursuant to Item 307 of Regulation S-K, our periodic reports must
disclose our conclusions about the effectiveness of our disclosure controls and procedures;  

Pursuant to Rule 13a-15 of the 1934 Act, our management must prepare an
annual report regarding its assessment of the effectiveness of internal controls over financial reporting and may be required to obtain an audit of the effectiveness of internal controls over financial reporting performed by our independent
registered public accounting firm; and  

Pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. The
Sarbanes-Oxley Act of 2002 requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder. We will continue to monitor our compliance with all
regulations that are adopted under the Sarbanes-Oxley Act of 2002 and will take actions necessary to ensure that we are in compliance therewith. Business Development Company Regulations A BDC is regulated by the 1940 Act. A BDC must be organized in the United States for the purpose of investing in or lending to primarily
private companies and making significant managerial assistance available to them. A BDC may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A BDC provides stockholders the
ability to retain the liquidity of a publicly-traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies. We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority
of our outstanding voting securities, as required by the 1940 Act. A  16




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majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such companys voting securities present at a meeting if
more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our
business. As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority
of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore,
as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such
persons office. As a BDC, we are required to meet an asset coverage ratio, reflecting the value of our total assets to our total
senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 150%. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates
without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC. We are
generally not able to issue and sell our common stock at a price below net asset value per share without annual stockholder approval. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price
below the then-current net asset value of our common stock if the Board determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. In addition, we may generally issue new
shares of our common stock at a price below net asset value in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances. As a BDC, we were substantially limited in our ability to co-invest in privately negotiated
transactions with affiliated funds until we obtained an exemptive order from the SEC. The most recent exemptive order, received on June 13, 2017 (the Exemptive Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with SLR Capital Partners and is registered as
an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions to
the Exemptive Order. If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and
second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis. Although our investment professionals will endeavor to allocate investment opportunities in a fair and equitable
manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members
of our investment adviser. We will be periodically examined by the SEC for compliance with the federal securities laws, including the
1940 Act. Qualifying Assets Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are
referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDCs total assets. The principal categories of qualifying assets relevant to our business are the following: (1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to
certain limited exceptions) is an eligible portfolio company, or from any person who is,  17




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or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible
portfolio company is defined in the 1940 Act as any issuer which: (a) is organized under the laws of, and has its principal place of
business in, the United States; (b) is not an investment company (other than a small business investment company wholly owned by the
BDC); and (c) satisfies any of the following: i. does not have any class of securities that is traded on a national securities exchange; ii. has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting
and non-voting common equity of less than $250 million; iii. is controlled by
a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or iv. is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less
than $2.0 million. (2) Securities of any eligible portfolio company which we control, which, as defined by the 1940 Act, is presumed
to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the portfolio company. (3) Securities
purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer,
immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements. (4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such
securities and we already own 60% of the outstanding equity of the eligible portfolio company. (5) Securities received in exchange for or
distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities. (6) Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of
investment. (7) Office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained to conduct
the business operations of the BDC, deferred organization and operating expenses, and other noninvestment assets necessary and appropriate to its operations as a BDC, including notes of indebtedness of directors, officers, employees, and general
partners held by a BDC as payment for securities of such company issued in connection with an executive compensation plan described in Section 57(j) of the 1940 Act. Under Section 55(b) of the 1940 Act, the value of a BDCs assets shall be determined as of the date of the most recent financial
statements filed by such company with the SEC pursuant to Section 13 of the 1934 Act, and shall be determined no less frequently than annually. Significant Managerial Assistance to Portfolio Companies As a BDC, we offer, and must provide upon request, significant managerial assistance to our portfolio companies. This assistance could involve,
among other things, monitoring the operations of our portfolio  18




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companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. We may also
receive fees for these services. SLR Capital Management provides such managerial assistance, if any, on our behalf to portfolio companies that request this assistance. Temporary Investments Pending investment in other types of qualifying assets, as described above, our investments may consist of cash, cash equivalents,
U.S. government securities or high-quality investment grade debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets.
Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such repurchase agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the
purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an
agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements from a single
counterparty, we would not meet the diversification tests in order to qualify as a RIC for U.S. federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our
investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions. Senior Securities We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if
our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. In addition, while certain senior securities remain outstanding, we may be required to make provisions to prohibit any distribution to
our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary
purposes without regard to asset coverage. We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us. Code of Ethics We
and SLR Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that
establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. Each code of ethics is
available on the EDGAR Database on the SECs Internet site at http://www.sec.gov. You may also obtain copies of the codes of ethics, after paying a duplicating fee, by electronic request at the following Email address: publicinfo@sec.gov. Compliance Policies and Procedures We and our investment adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation
of the federal securities laws. We are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and to designate a chief compliance officer to be responsible for their
administration. Guy Talarico currently serves as our Chief Compliance Officer.  19




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Proxy Voting Policies and Procedures We have delegated our proxy voting responsibility to our investment adviser. A summary of the Proxy Voting Policies and Procedures of our
adviser are set forth below. The guidelines are reviewed periodically by the adviser and our non-interested directors, and, accordingly, are subject to change. As an investment adviser registered under the Advisers Act, SLR Capital Partners has a fiduciary duty to act solely in the best interests of
its clients. As part of this duty, it recognizes that it must vote securities held by its clients in a timely manner free of conflicts of interest. These policies and procedures for voting proxies for investment advisory clients are intended to
comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act. Our investment
adviser votes proxies relating to our portfolio securities in the best interest of our stockholders. SLR Capital Partners reviews on a case-by-case basis each proposal
submitted for a proxy vote to determine its impact on our investments. Although it generally votes against proposals that may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to
do so. The proxy voting decisions of our investment adviser are made by the senior investment professionals who are responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, it requires
that: (i) anyone involved in the decision making process disclose to a managing member of SLR Capital Partners any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy
vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties. You may obtain information about how we voted proxies by making a written request for proxy voting information to: SLR Capital Partners, LLC,
500 Park Avenue, New York, NY 10022. Privacy Principles We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public
personal information. The following information is provided to help you understand what personal information we may have access to, how we protect that information and why, in certain cases, we may share such information with select other parties. Generally, we do not receive any non-public personal information relating to our stockholders,
although certain non-public personal information of our stockholders may become available to us. We do not disclose any non-public personal information about our
stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, through a transfer agent or proxy solicitor). We restrict access to non-public personal information about our stockholders to employees of our
investment adviser and its affiliates with a legitimate business need for the information. We maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of
our stockholders. Taxation as a Regulated Investment Company As a BDC, we elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, we generally will not
have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we timely distribute to our stockholders as dividends. To continue to qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each
taxable year, at least 90% of our investment company taxable income, which generally is our ordinary income  20




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plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the Annual Distribution Requirement). If we qualify as a RIC and satisfy
the Annual Distribution Requirement, then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term
capital losses) we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any ordinary income or capital gain not distributed (or deemed not distributed) to our
stockholders. We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a
timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in
that calendar year and (3) any ordinary income and net capital gains that we recognized in preceding years, but were not distributed during such years, and on which we paid no U.S. federal income tax (the Excise Tax Avoidance
Requirement). In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:  

at all times during each taxable year, have in effect an election to be treated as a BDC under the 1940 Act;  

derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with
respect to certain securities loans, gains from the sale of stock or other securities or currencies, or other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an
interest in a qualified publicly traded partnership; and  

diversify our holdings so that at the end of each quarter of the taxable year:  

at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities,
securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and  

no more than 25% of the value of our assets is invested in (i) the securities, other than U.S. government
securities or securities of other RICs, of one issuer, (ii) the securities of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses
or (iii) the securities of one or more qualified publicly traded partnerships. We may be required to
recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind (PIK) interest or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a
portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount accrued will be included in our
investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount. Because we may use debt financing, we will be subject to certain asset coverage ratio requirements under the 1940 Act and financial
covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other sources or are otherwise
limited in our ability to make distributions, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.  21




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Certain of our investment practices may be subject to special and complex U.S. federal
income tax provisions that may, among other things: (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or
ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v) adversely affect
the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization of certain complex financial transactions; and (vii) produce income that will not be qualifying income for purposes of the
90% gross income test described above. We will monitor our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions. Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such
warrants generally will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend on how long we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock
purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant. Failure
to Qualify as a Regulated Investment Company If we were unable to qualify for treatment as a RIC, we would be subject to U.S. federal
income tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. Such distributions would be taxable to our stockholders as dividends and,
provided certain holding period and other requirements were met, could qualify for treatment as qualified dividend income in the hands of non-corporate stockholders (and thus eligible for the
current 20% maximum rate) to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends received deduction. Distributions in excess of our
current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholders tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent
taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that
qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the non-qualifying year, we could be subject
to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special
election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification as a RIC. Investment Advisory Fees Pursuant to the
Investment Advisory and Management Agreement, we have agreed to pay SLR Capital Partners a fee for investment advisory and management services consisting of two componentsa base management fee and a performance-based incentive fee. The base management fee is calculated at an annual rate of 1.00% of our gross assets. For services rendered under the Investment Advisory and
Management Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters. Base management fees
for any partial month or quarter will be appropriately pro-rated. For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for
purposes of preserving investment flexibility in the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills, other short-term U.S. government or government agency securities, repurchase agreements or cash
borrowings. The performance-based incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on
our pre-incentive fee net investment income for the immediately preceding calendar quarter. For  22




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this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than
fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the
quarter (including the base management fee, expenses payable under the Administration Agreement to SLR Capital Management, and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the
performance-based incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind interest and zero coupon securities),
accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital
appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a
hurdle of 1.75% per quarter (7.00% annualized). Our net investment income used to calculate this part of the performance-based incentive fee is also included in the amount of our gross assets used to calculate the 1.00% base management fee. We
pay SLR Capital Partners a performance-based incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:  

no performance-based incentive fee in any calendar quarter in which our
pre-incentive fee net investment income does not exceed the hurdle of 1.75%;  

50% of our pre-incentive fee net investment income with respect to that
portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.9167% in any calendar quarter (11.67% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.9167%) as the catch-up. The
catch-up is meant to provide our investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net
investment income exceeds 2.9167% in any calendar quarter; and  

20% of the amount of our pre-incentive fee net investment income, if any,
that exceeds 2.9167% in any calendar quarter (11.67% annualized) is payable to SLR Capital Partners (once the hurdle is reached and the catch-up is achieved, 20% of all
pre-incentive fee investment income thereafter is allocated to SLR Capital Partners). The following is a graphical representation of the calculation of the income-related portion of the incentive fee: Pre-incentive fee net investment income (expressed as a percentage of the value of net assets)  LOGO Percentage of pre-incentive fee net investment income allocated to SLR Capital Partners These calculations are appropriately pro-rated for any period of less than three months. You should be
aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee
hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our investment adviser with respect to pre-incentive fee net investment income. The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the
Investment Advisory and Management Agreement, as of the termination date), and  23




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equals 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital
depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio. Examples of Quarterly Incentive Fee Calculation Example 1: Income Related Portion of Incentive Fee (*): Alternative 1: Assumptions Investment income (including interest, dividends, fees, etc.) = 1.25% Hurdle rate (1) = 1.75% Management fee (2) = 0.25% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20% Pre-incentive fee net investment income (investment income  (management fee + other expenses)) = 0.80% Pre-incentive net investment income does not exceed hurdle rate, therefore there is no incentive fee. Alternative 2: Assumptions Investment income (including interest, dividends, fees, etc.) = 2.70% Hurdle rate (1) = 1.75% Management fee (2) = 0.25% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20% Pre-incentive fee net investment income (investment income  (management fee + other expenses)) = 2.25% Incentive fee = 50% × pre-incentive fee net investment income, subject to the catch-up (4) = 50% × (2.25%  1.75%) = 0.25% Alternative 3: Assumptions Investment income (including
interest, dividends, fees, etc.) = 4.00% Hurdle rate (1) = 1.75% Management fee (2) = 0.25% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20% Pre-incentive fee net investment income (investment income  (management fee + other expenses)) = 3.55% Incentive fee = 20% × pre-incentive fee net investment income, subject to catch-up (4) Incentive fee = 50% ×
catch-up + (20% × (pre-incentive fee net investment income  2.9167%)) Catch-up = 2.9167%  1.75% = 1.1667% Incentive fee = (50%
× 1.1667%) + (20% × (3.55%  2.9167%)) = 0.58334% + (20% × 0.6333%) = 0.58334% + 0.12667% = 0.71001%  (*)
The hypothetical amount of pre-incentive fee net investment income
shown is based on a percentage of total net assets.  24




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(1)
Represents 7% annualized hurdle rate. (2)
Represents 1% annualized management fee. (3)
Excludes organizational and offering expenses. (4)
The catch-up provision is intended to provide our
investment adviser with an incentive fee of approximately 20% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.9167% in any
calendar quarter. Example 2: Capital Gains Portion of Incentive Fee: Alternative 1: Assumptions  

Year 1: $20 million investment made in Company A (Investment A), and $30 million investment
made in Company B (Investment B)  

Year 2: Investment A sold for $50 million and fair market value (FMV) of Investment B determined
to be $32 million  

Year 3: FMV of Investment B determined to be $25 million  

Year 4: Investment B sold for $31 million The capital gains portion of the incentive fee would be:  

Year 1: None  

Year 2: Capital gains incentive fee of $6 million ($30 million realized capital gains on sale of
Investment A multiplied by 20%)  

Year 3: None $5 million cumulative fee (20% multiplied by $25 million ($30 million cumulative capital gains less $5 million cumulative capital
depreciation)) less $6 million (previous capital gains fee paid in Year 2)  

Year 4: Capital gains incentive fee of $200,000 $6.2 million cumulative fee ($31 million cumulative realized capital gains multiplied by 20%) less $6 million (previous capital gains fee paid
in Year 2) Alternative 2: Assumptions  

Year 1: $20 million investment made in Company A (Investment A), $30 million investment
made in Company B (Investment B) and $25 million investment made in Company C (Investment C)  

Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of
Investment C determined to be $25 million  

Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million  

Year 4: FMV of Investment B determined to be $24 million  

Year 5: Investment B sold for $20 million The capital gains incentive fee, if any, would be:  

Year 1: None  

Year 2: $5 million capital gains incentive fee  25




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20% multiplied by $25 million ($30 million realized capital gains on sale of Investment A less
$5 million unrealized capital depreciation on Investment B)  

Year 3: $1.4 million capital gains incentive fee(1) $6.4 million cumulative fee (20% multiplied by $32 million ($35 million cumulative realized capital gains less
$3 million unrealized capital depreciation)) less $5 million (previous capital gains fee paid in Year 2)  

Year 4: None  

Year 5: None $5 million cumulative fee (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10
million)) less $6.4 million (previous cumulative capital gains fee paid in Year 2 and Year 3)  (1)
As illustrated in Year 3 of Alternative 1 above, if SLR Senior were to be wound up on a date other than
December 31 of any year, SLR Senior may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if SLR Senior had been wound up on December 31 of such year. Payment of Our Expenses All investment
professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such
services, are provided and paid for by SLR Capital Partners. We bear all other costs and expenses of our operations and transactions, including (without limitation):  

the cost of our organization and this offering;  

the cost of calculating our net asset value, including the cost of any third-party valuation services;  

the cost of effecting sales and repurchases of our shares and other securities;  

interest payable on debt, if any, to finance our investments;  

fees payable to third parties relating to, or associated with, making investments, including fees and expenses
associated with performing due diligence reviews of prospective investments and advisory fees;  

transfer agent and custodial fees;  

fees and expenses associated with marketing efforts;  

federal and state registration fees, any stock exchange listing fees;  

federal, state and local taxes;  

independent directors fees and expenses;  

brokerage commissions;  

fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;  

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;  

fees and expenses associated with independent audits and outside legal costs;  

costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and
state securities laws; and  26




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

all other expenses incurred by either SLR Capital Management or us in connection with administering our business,
including payments under the Administration Agreement based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent and the
allocable portion of the cost of the Companys chief compliance officer and chief financial officer and their respective staffs. Available Information The SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov. Our internet address is www.slrseniorinvestmentcorp.com. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on our website is not incorporated by reference into this annual report on
Form 10-K, and you should not consider information contained on our website to be part of this annual report on Form 10-K.  27




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Item 1A.
Risk Factors Before you invest in our securities, you should be aware of various risks, including those described below. You should carefully consider these risk
factors, together with all of the other information included in this annual report on Form 10-K, before you decide whether to make an investment in our securities. The risks described in this
document and set out below are not the only risks we face. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading
price of our common stock could decline or the value of our preferred stock, debt securities, subscription rights, or warrants may decline, and you may lose all or part of your investment. Please refer also to those risk factors relating to our
proposed merger with SLR Investment Corp. included under the caption Risk FactorsRisks Relating to the Mergers in pre-effective amendment no.1 to SLR Investment Corp.s registration
statement on Form N-14 (333-261675) filed with the SEC on January 31, 2022, which are incorporated herein by reference. SUMMARY RISK FACTORS Risks Relating
to Our Investments  

We operate in a highly competitive market for investment opportunities.  

Our investments are very risky and highly speculative.  

The lack of liquidity in our investments may make it difficult for us to dispose of our investments at a
favorable price, which may adversely affect our ability to meet our investment objectives.  

Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject
us to a risk of significant loss if any of these companies performs poorly or defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.  

Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from
transacting with certain countries, individuals and companies.  

If we cannot obtain additional capital because of either regulatory or market price constraints, we could be
forced to curtail or cease our new lending and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.  

We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.  

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations
and reduce our return on equity.  

We may be exposed to higher risks with respect to our investments that include original issue discount or PIK
interest. Risks Relating to an Investment in Our Securities  

Our shares may trade at a substantial discount from net asset value and may continue to do so over the long term.  

Our common stock price may be volatile and may decrease substantially.  

Our business and operation could be negatively affected if we become subject to any securities litigation or
shareholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price.  

If the current period of capital market disruption and instability continues for an extended period of time,
there is a risk that investors in our equity securities may not receive distributions consistent with  28




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historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.  

Due to the COVID-19 pandemic or other
disruptions in the economy, we may reduce or defer our dividends and choose to incur U.S. federal excise tax in order preserve cash and maintain flexibility.  

We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay
U.S. federal income taxes in excess of the cash distributions they receive.  

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market
price of our common stock.  

The net asset value per share of our common stock may be diluted if we sell shares of our common stock in one or
more offerings at prices below the then current net asset value per share of our common stock.  

To the extent we use debt or preferred stock to finance our investments, changes in interest rates will affect
our cost of capital and net investment income. Risks Relating to Our Business and Structure  

We are dependent upon SLR Capital Partners key personnel for our future success.  

Our business model depends to a significant extent upon strong referral relationships with financial sponsors,
and the inability of the senior investment professionals of our Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.  

Our financial condition and results of operations will depend on SLR Capital Partners ability to manage our
future growth effectively by identifying, investing in and monitoring companies that meet our investment criteria.  

We may need to raise additional capital to grow because we must distribute most of our income.  

Any failure on our part to maintain our status as a BDC would reduce our operating flexibility and we may be
limited in our investment choices as a BDC.  

Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise
additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.  

We have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may
increase the risk of investing in us.  

It is likely that the terms of any current or future long-term or revolving credit or warehouse facility we may
enter into in the future could constrain our ability to grow our business.  

There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.  

There are significant potential conflicts of interest, including SLR Capital Partners management of other
investment funds such as SLR Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in SLR Senior Investment Corp. is not an investment in SLR Investment Corp., SCP
Private Credit Income BDC LLC, or SLR HC BDC LLC.  

We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss.  

Our incentive fee may induce SLR Capital Partners to pursue speculative investments.  29




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

We may become subject to corporate-level U.S. federal income tax if we are unable to qualify and maintain our
qualification for tax treatment as a regulated investment company under Subchapter M of the Code.  

The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery
systems and management continuity planning could impair our ability to conduct business effectively.  

Our business is subject to increasingly complex corporate governance, public disclosure and accounting
requirements that could adversely affect our business and financial results.  

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain
types of actions and proceedings that may be initiated by our stockholders and provide that claims relating to causes of action under the Securities Act may only be brought in federal district courts, which could limit our stockholders ability
to obtain a favorable judicial forum for disputes with us or our directors, officers or agents, if any, and could discourage lawsuits against us and our directors, officers and agents, if any. RISK FACTORS (CONTINUED) Risks
Relating to Our Investments We operate in a highly competitive market for investment opportunities. A number of entities compete with us to make the types of investments that we target in leveraged companies. We compete with other BDCs, public and private
funds, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and have considerably greater financial,
technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different
risk assessments than we have, which could allow them to consider a wider variety of investments and establish more relationships and offer better pricing and a more flexible structure than we are able to do. Furthermore, many of our potential
competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. If we are unable to source attractive investments, we may hold a greater percentage of our assets in cash and cash equivalents than anticipated,
which could impact potential returns on our portfolio. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this
competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective. Participants in our industry compete on several factors, including price, flexibility in transaction structure, customer service, reputation, market knowledge
and speed in decision-making. We do not seek to compete primarily based on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be comparable to or lower than the rates we offer.
We may lose investment opportunities if we do not match our competitors pricing, terms and structure. However, if we match our competitors pricing, terms and structure, we may experience decreased net interest income and increased risk
of credit loss. Our investments are very risky and highly speculative. We invest primarily in senior loans, including first lien and second lien debt instruments, made to private middle-market companies whose debt is rated below
investment grade, which we refer to collectively as senior loans.  30




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We may also invest in debt of public companies that are thinly traded or equity securities. Securities rated below investment grade are speculative and are often referred to as leveraged
loans, high yield or junk securities, and may be considered high risk compared to debt instruments that are rated investment grade. Senior Secured Loans. When we make a senior secured term loan investment, including a first lien or second lien debt investment, in a portfolio
company, we generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which we expect to help mitigate the risk that we will not be repaid. However, there is a risk that
the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a
result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio companys financial condition and
prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and
interest payments according to the loans terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies. Equity Investments. When we invest in senior secured loans we may acquire common equity securities as well. In certain other unique
circumstances we may also make equity investments in businesses that make senior loans, such as our investments in SLR Business Credit and SLR Healthcare ABL. In addition, we may invest directly in the equity securities of portfolio companies
without limitation as to market capitalization. For instance, we may invest in thinly traded companies, the prices of which may be subject to erratic market movement. Our goal is ultimately to exit such equity interests and realize gains upon our
disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on
the disposition of any equity interests may not be sufficient to offset any other losses we experience. In addition, investing in middle-market companies
involves a number of significant risks, including:  

these companies may have limited financial resources and may be unable to meet their obligations under their debt
securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;  

they typically have shorter operating histories, narrower product lines and smaller market shares than larger
businesses, which tend to render them more vulnerable to competitors actions and market conditions, as well as general economic downturns;  

they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the
death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;  

they generally have less predictable operating results, may from time to time be parties to litigation, may be
engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition,
our executive officers, directors and our Investment Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies; and  

they may have difficulty accessing the capital markets to meet future capital needs, which may limit their
ability to grow or to repay their outstanding indebtedness upon maturity.  31




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The lack of liquidity in our investments may make it difficult for us to dispose of our investments at
a favorable price, which may adversely affect our ability to meet our investment objectives. We generally make investments in private companies.
We invest and expect to continue investing in companies whose securities have no established trading market and whose securities are and will be subject to legal and other restrictions on resale or whose securities are and will be less liquid than
are publicly-traded securities. Investments purchased by us that are liquid at the time of purchase may subsequently become illiquid due to events relating to the issuer of the investments, market events, economic conditions or investor perceptions.
The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at
which we have previously recorded our investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. However, to maintain our qualification as a BDC and as a RIC, we may have to dispose of investments if we do
not satisfy one or more of the applicable criteria under the respective regulatory frameworks. Domestic and foreign markets are complex and interrelated, so that events in one sector of the world markets or economy, or in one geographical region,
can reverberate and have materially negative consequences for other markets, economic or regional sectors in a manner that may not be foreseen and which may negatively impact the liquidity of our investments and materially harm our business. In
addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public information regarding such portfolio company. Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if
any of these companies performs poorly or defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry. Our portfolio may be concentrated in a limited number of portfolio companies and industries. For example, as of December 31, 2021, our investments in SLR
Business Credit and SLR Healthcare ABL comprised 14.0% and 6.3%, respectively, of our total assets and our investments in diversified financial services (which includes SLR Business Credit and SLR Healthcare ABL) and health care providers &
services industries comprised 20.2% and 11.4%, respectively, of our total assets. Beyond the asset diversification requirements associated with our qualification as a RIC under Subchapter M of the Code, we do not have fixed guidelines for
diversification, and while we are not targeting any specific industries, our investments may be concentrated in relatively few industries or portfolio companies. As a result, the aggregate returns we realize may be significantly adversely affected
if a small number of investments perform poorly or if we need to write down the value of any one investment. Additionally, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we
realize. Our investments in securities rated below investment grade are speculative in nature and are subject to additional risk factors such as
increased possibility of default, illiquidity of the security, and changes in value based on changes in interest rates. The securities that we
invest in are typically rated below investment grade. Securities rated below investment grade are speculative and are often referred to as leveraged loans, high yield or junk securities, and may be considered
high risk compared to debt instruments that are rated investment grade. High yield securities are regarded as having predominantly speculative characteristics with respect to the issuers capacity to pay interest and repay principal
in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. In addition, high yield securities generally offer a higher current yield than that available from higher grade issues, but typically involve
greater risk. These securities are especially sensitive to adverse changes in general economic conditions, to changes in the financial condition of their issuers and to price fluctuation in response to changes in interest rates. During periods of
economic downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that could adversely affect their ability to make payments of principal and interest and increase the possibility of default.
The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities. In addition, many of our debt investments will not fully amortize during their lifetime, which means that a borrower may be
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to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity. Upon
such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due upon maturity. Price declines and
illiquidity in the corporate debt markets have adversely affected, and may continue to adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation. Any unrealized
depreciation that we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income available for distribution and could adversely affect our ability to service our outstanding borrowings. As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or
under the direction of our board of directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. Any unrealized depreciation in our loan portfolio could be an indication of a portfolio
companys inability to meet its repayment obligations to us with respect to the affected loans. This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods and could
materially adversely affect our ability to service our outstanding borrowings. Depending on market conditions, we could incur substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on
our business, financial condition and results of operations. There is uncertainty surrounding potential legal, regulatory and policy changes by new
presidential administrations in the United States that may directly affect financial institutions and the global economy. As a result of the
November 2020 elections in the United States, the Democratic Party gained control of both the Presidency and the Senate from the Republican Party. Therefore, changes in federal policy, including tax policies, and at regulatory agencies are expected
to occur over time through policy and personnel changes, which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and
political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain. Uncertainty surrounding future changes may adversely affect our operating environment and therefore our
business, financial condition, results of operations and growth prospects. Economic sanction laws in the United States and other jurisdictions may
prohibit us and our affiliates from transacting with certain countries, individuals and companies. Economic sanction laws in the United States and
other jurisdictions may prohibit us or our affiliates from transacting with certain countries, individuals and companies. In the United States, the U.S. Department of the Treasurys Office of Foreign Assets Control administers and enforces
laws, executive orders and regulations establishing U.S. economic and trade sanctions, which prohibit, among other things, transactions with, and the provision of services
to, certain non-U.S. countries, territories, entities and individuals. These types of sanctions may significantly restrict or completely prohibit investment activities in certain
jurisdictions, and if we, our portfolio companies or other issuers in which we invest were to violate any such laws or regulations, we may face significant legal and monetary penalties. The Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and regulations, as well as anti-boycott regulations, may also apply to and
restrict our activities, our portfolio companies and other issuers of our investments. If an issuer or we were to violate any such laws or regulations, such issuer or we may face significant legal and monetary penalties. The U.S. government has
indicated that it is particularly focused on FCPA enforcement, which may increase the risk that an issuer or us becomes the subject of such actual or threatened enforcement. In addition, certain commentators have suggested that private investment
firms and the funds that they manage may face increased scrutiny and/or liability with respect to the activities of their underlying portfolio companies. As such, a violation of the FCPA or other applicable regulations by us or an  33




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issuer of our portfolio investments could have a material adverse effect on us. We are committed to complying with the FCPA and other anti-corruption laws and regulations, as well as anti-boycott
regulations, to which it is subject. As a result, we may be adversely affected because of our unwillingness to enter into transactions that violate any such laws or regulations. If we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending
and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely. Our
ability to secure additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to the prevailing general economic and credit market
conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control. The worsening of current economic and capital market conditions could have a
material adverse effect on our ability to secure financing on favorable terms, if at all. If we are unable to obtain debt capital, then our equity
investors will not benefit from the potential for increased returns on equity resulting from leverage to the extent that our investment strategy is successful and we may be limited in our ability to make new commitments or fundings to our portfolio
companies. We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient. In the event of a default by a portfolio company on a secured loan, we will only have recourse to the assets collateralizing the loan. If the underlying
collateral value is less than the loan amount, we will suffer a loss. In addition, we sometimes make loans that are unsecured, which are subject to the risk that other lenders may be directly secured by the assets of the portfolio company. In the
event of a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets. In cases described above, we may lack control over the underlying asset collateralizing our loan or the
underlying assets of the portfolio company prior to a default and, as a result, the value of the collateral may be reduced by acts or omissions by owners or managers of the assets. In the event of bankruptcy of a portfolio company, we may not have full recourse to its assets in order to satisfy our loan, or our loan may be subject to
equitable subordination. In addition, certain of our loans are subordinate to other debt of the portfolio company. If a portfolio company defaults on our loan or on debt senior to our loan, or in the event of a portfolio company bankruptcy, our loan
will be satisfied only after the senior debt receives payment. Where debt senior to our loan exists, the presence of inter-creditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our
remedies (through standstill periods) and control decisions made in bankruptcy proceedings relating to the portfolio company. Bankruptcy and portfolio company litigation can significantly increase collection losses and the time needed
for us to acquire the underlying collateral in the event of a default, during which time the collateral may decline in value, causing us to suffer further losses. If the value of collateral underlying our loan declines or interest rates increase during the term of our loan, a portfolio company may not be able to obtain
the necessary funds to repay our loan at maturity through refinancing. Decreasing collateral value and/or increasing interest rates may hinder a portfolio companys ability to refinance our loan because the underlying collateral cannot satisfy
the debt service coverage requirements necessary to obtain new financing. If a borrower is unable to repay our loan at maturity, we could suffer a loss which may adversely impact our financial performance.  34




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The business, financial condition and results of operations of our portfolio companies could be
adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in which they conduct business. The business and operating results of our portfolio companies may be impacted by worldwide economic conditions, such as the economic impact that the COVID-19 pandemic has imposed, and may continue to impose, on the U.S. and worldwide economy. Any deterioration of general economic conditions may lead to significant declines in corporate earnings or loan
performance, and the ability of corporate borrowers to service their debt, any of which could trigger a period of global economic slowdown, and have an adverse impact on our performance and financial results, and the value and the liquidity of our
investments. In an economic downturn, we could have non-performing assets or an increase in non-performing assets, and we would anticipate that the value of our
portfolio would decrease during these periods. For instance, concerns of economic slowdown in China and other emerging markets and signs of deteriorating sovereign debt conditions in Europe could lead to disruption and instability in the global
financial markets. The significant debt in the United States and European countries is expected to hinder growth in those countries for the foreseeable future. In the future, the U.S. government may not be able to meet its debt payments unless the
federal debt ceiling is raised. If legislation increasing the debt ceiling is not enacted, as needed, and the debt ceiling is reached, the U.S. federal government may stop or delay making payments on its obligations. Any default by the U.S.
government on its obligations or any prolonged U.S. government shutdown could negatively impact the U.S. economy and our portfolio companies. Multiple factors relating to the international operations of some of our portfolio companies and to
particular countries in which they operate could negatively impact their business, financial condition and results of operations. Some of the products of
our portfolio companies are developed, manufactured, assembled, tested or marketed outside the United States. Any conflict or uncertainty in these countries, including due to natural disasters, public health concerns (including the global COVID-19 pandemic), political unrest or safety concerns, could harm their business, financial condition and results of operations. In addition, if the government of any country in which their
products are developed, manufactured or sold sets technical or regulatory standards for products developed or manufactured in or imported into their country that are not widely shared, it may lead some of their customers to suspend imports of their
products into that country, require manufacturers or developers in that country to manufacture or develop products with different technical or regulatory standards and disrupt cross-border manufacturing, marketing or business relationships which, in
each case, could harm their businesses. Our failure to make follow-on investments in our
portfolio companies could impair the value of our portfolio. Following an initial investment in a portfolio company, we may make additional
investments in that portfolio company as follow-on investments, in order to: (i) increase or maintain in whole or in part our ownership percentage; (ii) exercise warrants,
options or convertible securities that were acquired in the original or subsequent financing; or (iii) attempt to preserve or enhance the value of our investment. We may elect not to
make follow-on investments or otherwise lack sufficient funds to make those investments. We will have the discretion to make
any follow-on investments, subject to the availability of capital resources. The failure to make follow-on investments may, in some circumstances,
jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, either because
we prefer other opportunities or because we are subject to BDC requirements that would prevent such follow-on investments or the desire to maintain our RIC tax treatment. Where we do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio
companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments. Although we hold
controlling equity positions in some of our portfolio companies, we do not currently hold controlling equity positions in the majority of our portfolio companies. As a result, we are subject to the risk that  35




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a portfolio company in which we do not have a controlling interest may make business decisions with which we disagree, and that the management and/or stockholders of such portfolio company may
take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with
the actions of a portfolio company and may therefore suffer a decrease in the value of our investments. Prepayments of our debt investments by our
portfolio companies could adversely impact our results of operations and reduce our return on equity. We are subject to the risk that the
investments we make in our portfolio companies may be prepaid prior to maturity. When this occurs, we may reduce our borrowings outstanding or reinvest these proceeds in temporary investments, pending their future investment in new portfolio
companies. These temporary investments, if any, will typically have substantially lower yields than the debt investment being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio
company may also be at lower yields than the debt investment that was prepaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally,
prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common stock. We may choose to
waive or defer enforcement of covenants in the debt securities held in our portfolio, which may cause us to lose all or part of our investment in these companies. We structure the debt investments in our portfolio companies to include business and financial covenants placing affirmative and negative obligations on the
operation of the companys business and its financial condition. However, from time to time, we may elect to waive breaches of these covenants, including our right to payment, or waive or defer enforcement of remedies, such as acceleration of
obligations or foreclosure on collateral, depending upon the financial condition and prospects of the particular portfolio company. These actions may reduce the likelihood of our receiving the full amount of future payments of interest or principal
and be accompanied by a deterioration in the value of the underlying collateral as many of these companies may have limited financial resources, may be unable to meet future obligations and may go bankrupt. This could negatively impact our ability
to pay distributions, could adversely affect our results of operation and financial condition and cause the loss of all or part of your investment. In
addition, some of the loans in which we may invest may be covenant-lite loans. We use the term covenant-lite loans to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally,
covenant-lite loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the
borrower, rather than by a deterioration in the borrowers financial condition. Accordingly, to the extent we invest in covenant-lite loans, we may have fewer rights against a borrower and may have a greater risk of loss on such
investments as compared to investments in or exposure to loans with financial maintenance covenants. Our loans could be subject to equitable
subordination by a court which would increase our risk of loss with respect to such loans. Courts may apply the doctrine of equitable
subordination to subordinate the claim or lien of a lender against a borrower to claims or liens of other creditors of the borrower, when the lender or its affiliates is found to have engaged in unfair, inequitable or fraudulent conduct. The courts
have also applied the doctrine of equitable subordination when a lender or its affiliates is found to have exerted inappropriate control over a client, including control resulting from the ownership of equity interests in a client. We have made
direct equity investments or received warrants in connection with loans. Payments on one or more of our loans, particularly a loan to a client in which we may also hold an equity interest, may be subject to claims of equitable subordination. If we
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deemed to have the ability to control or otherwise exercise influence over the business and affairs of one or more of our portfolio companies resulting in economic hardship to other creditors of
that company, this control or influence may constitute grounds for equitable subordination and a court may treat one or more of our loans as if it were unsecured or common equity in the portfolio company. In that case, if the portfolio company were
to liquidate, we would be entitled to repayment of our loan on a pro-rata basis with other unsecured debt or, if the effect of subordination was to place us at the level of common equity, then on an
equal basis with other holders of the portfolio companys common equity only after all of its obligations relating to its debt and preferred securities had been satisfied. An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about
these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns. We invest primarily in privately held companies. Generally, little public information exists about these companies, and we are required to rely on the ability
of SLR Capital Partners investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a
fully informed investment decision, and we may lose money on our investments. Also, smaller privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely affect
our investment returns as compared to companies investing primarily in the securities of public companies. Our portfolio companies may incur debt
that ranks equally with, or senior to, some of our investments in such companies. We invest primarily in senior secured loans, including second
lien, as well as unsecured debt instruments issued by our portfolio companies. If we invest in second lien, or unsecured debt instruments, our portfolio companies typically may be permitted to incur other debt that ranks equally with, or senior to,
such debt instruments. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities
in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled
to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt
ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the
relevant portfolio company. Any such limitations on the ability of our portfolio companies to make principal or interest payments to us, if at all, may reduce our net asset value and have a negative material adverse impact to our business, financial
condition and results of operation. Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S.
investments. Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies
may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid
markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual
obligations, lack of uniform accounting and auditing standards and greater price volatility. These risks may be more pronounced for portfolio companies located or operating primarily in emerging markets, whose economies, markets and legal systems
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Although most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign
currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates,
differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no
assurance that we will, in fact, hedge currency risk, or that if we do, such strategies will be effective. We may expose ourselves to risks if we
engage in hedging transactions. If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We may
utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and
market interest rates. Hedging against a decline in the values of our portfoliopositions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However,
such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the
underlying portfolio positions should increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we
may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in
any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we
may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it
may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to
fluctuate as a result of factors not related to currency fluctuations. To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may expose us to unexpected
losses from positions where we believed that our risk had been appropriately hedged. Our Investment Adviser may not be able to achieve the same or
similar returns as those achieved for other funds it currently manages or by our senior investment professionals while they were employed at prior positions. Our Investment Adviser manages other funds, including other BDCs, and may manage other entities in the future. The track record and achievements of these other
entities are not necessarily indicative of future results that will be achieved by our Investment Adviser because these other entities may have investment objectives and strategies that differ from ours. Additionally, although in the past our senior
investment professionals held senior positions at a number of investment firms, their track record and achievements are not necessarily indicative of future results that will be achieved by our Investment Adviser. In their roles at such other firms,
our senior investment professionals were part of investment teams, and they were not solely responsible for generating investment ideas. In addition, such investment teams arrived at investment decisions by consensus. We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest. Zero-coupon bonds pay interest only at maturity rather than at intervals during the life of the security. Deferred interest rate bonds generally provide for a
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securities are debt obligations that pay interest in the form of other debt obligations, instead of in cash. Each of these instrumentsis normally issued and traded at a deep
discount from face value. Zero-coupon bonds, deferred interest rate bonds and PIKs allow an issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk than bonds that pay
interest currently or in cash. In addition, such investments experience greater volatility in market value due to changes in interest rates than debt obligations that provide for regular payments of interest. To the extent the Company invests in original issue discount instruments, including PIK, zero coupon bonds, and debt securities with attached warrants,
investors will be exposed to the risks associated with the inclusion of such non-cash income in taxable and accounting income prior to receipt of cash, including the following:  

The interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the
deferred payments are due in cash at the maturity of the loan;  

The interest rates on PIK loans are higher to reflect the time-value of money on deferred interest payments and
the higher credit risk of borrowers who may need to defer interest payments;  

PIK instruments may have unreliable valuations because the accruals require judgments about ultimate
collectability of the deferred payments and the value of the associated collateral;  

An election to defer PIK income payments by adding them to principal increases the Companys gross assets
and, thus, increases future base fees to the Investment Adviser and, because income payments will then be payable on a larger principal amount, the PIK election also increases the Investment Advisers future income incentive fees at a
compounding rate;  

Market prices of original issue discount instruments are more volatile because they are affected to a greater
extent by interest rate changes than instruments that pay interest periodically in cash;  

The deferral of interest on a PIK loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan; and  

Original issue discount creates the risk of non-refundable cash payments
to the Investment Adviser based on non-cash accruals that may never be realized. Risks
Relating to an Investment in Our Securities Our shares may trade at a substantial discount from net asset value and may continue to do so over
the long term. Shares of BDCs may trade at a market price that is less than the net asset value that is attributable to those shares. The
possibility that our shares of common stock will trade at a substantial discount from net asset value over the long term is separate and distinct from the risk that our net asset value will decrease. We cannot predict whether shares of our common
stock will trade above, at or below our net asset value in the future. If our common stock trades below its net asset value, we will generally not be able to issue additional shares or sell our common stock at its market price without first
obtaining the approval for such issuance from our stockholders and our independent directors. At our 2021 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of
our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set
forth in the proxy statement pertaining thereto, during a periodbeginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual
Stockholders Meeting and the date of our 2022 Annual Stockholders Meeting. However, notwithstanding such stockholder approval, since our initial public offering on February 24, 2011, we have not sold any shares of our common stock in an
offering that resulted in proceeds to us of less than our then current net asset value per share. Any offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.
If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our net asset value could decrease and our level of distributions could be impacted.  39




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Our common stock price may be volatile and may decrease substantially. The trading price of our common stock may fluctuate substantially. The price of our common stock that will prevail in the market may be higher or lower than
the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:  

price and volume fluctuations in the overall stock market from time to time;  

investor demand for our shares;  

significant volatility in the market price and trading volume of securities of BDCs or other companies in our
sector, which are not necessarily related to the operating performance of these companies;  

exclusion of our common stock from certain market indices, such as the Russell 2000 Financial Services Index,
which could reduce the ability of certain investment funds to own our common stock and put short-term selling pressure on our common stock;  

changes in regulatory policies or tax guidelines with respect to RICs or BDCs;  

failure to qualify as a RIC, or the loss of RIC tax treatment;  

any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities
analysts;  

changes, or perceived changes, in the value of our portfolio investments;  

departures of SLR Capital Partners key personnel;  

operating performance of companies comparable to us;  

changes in the prevailing interest rates;  

loss of a major funding source; or  

general economic conditions and trends and other external factors. Our businesses may be adversely affected by litigation and regulatory proceedings. From time to time, we may be subject to legal actions as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas.
In any such claims or actions, demands for substantial monetary damages may be asserted against us and may result in financial liability or an adverse effect on our reputation among investors. In connection with acquisitions of, and investments in,
businesses complementary to our business, we have been and may be in the future subject to securities litigation or shareholder activism in connection with such acquisitions or investments. Securities litigation and shareholder activism, including
potential proxy contests, could result in substantial costs and divert managements and our board of directors attention and resources from our business. We may be unable to accurately estimate our exposure to litigation risk when we
record balance sheet reserves for probable loss contingencies. As a result, any reserves we establish to cover any settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results
of operations or financial condition. In regulatory enforcement matters, claims for disgorgement, the imposition of penalties and the imposition of other remedial sanctions are possible. If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our
equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital. We intend to make distributions on a monthly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will
achieve investment results that will allow us to make a specified  40




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level of cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report or incorporated herein
by reference, including the COVID-19 pandemic described above. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the
jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time, it could result in reduced cash flows to us from our existing portfolio
companies, which could reduce cash available for distribution to our stockholders. If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions. If we
declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent
we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholders investment. Although such return of capital may not be taxable, such distributions
would generally decrease a stockholders basis in our common stock and may therefore increase such stockholders tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder
to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price. As a
RIC, if we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possibly losing the U.S. federal income tax benefits allowable to RICs. We cannot assure you that you will receive
distributions at a particular level or at all. In certain cases, we may recognize income before or without receiving the accompanying cash. Depending on
the amount of noncash income, this could result in difficulty satisfying the annual distribution requirement applicable to RICs. Accordingly, we may have to sell some portfolio investments at times it would not consider advantageous, raise
additional debt or equity capital or reduce new investments to meet these distribution requirements. Due to the COVID-19 pandemic or other disruptions in the economy, we may reduce or
defer our dividends and choose to incur U.S. federal excise tax in order preserve cash and maintain flexibility. In order to maintain our tax
treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital
losses). If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized
net short-term capital losses) that we timely distribute to shareholders. We will be subject to a 4% U.S. federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our
ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and
(iii) any ordinary income and net capital gains that were recognized for preceding years, but were not distributed during such years and on which we paid no U.S. federal income tax. Any net operating losses that we incur in periods during which
we qualify as a RIC will not offset net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) that we are otherwise required to distribute, and we cannot pass such net operating losses through
to our stockholders. In addition, net operating losses that we carry over to a taxable year in which we qualify as a RIC normally cannot offset ordinary income or capital gains. Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we pay a
distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal income tax purposes
as if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid during the following taxable year that will allow us to maintain our
qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, we may defer  41




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distribution of income earned during the current year until December of the following year. For example, we may defer distributions of income earned during 2022 until as late as
December 31, 2023. If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution. Due to the COVID-19 pandemic or other disruptions in the economy, we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and
maintain flexibility. For example, we may reduce our dividends and/or defer dividends to the following taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S.
federal excise tax on such amounts. To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed below under We may choose to
pay distributions in our own stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash distributions they receive. We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of
the cash distributions they receive. We may distribute taxable distributions that are payable in cash or shares of our common stock at the
election of each stockholder. Under certain applicable provisions of the Code and the published guidance, distributions payable of a publicly offered RIC that are in cash or in shares of stock at the election of stockholders may be treated as
taxable distributions. The Internal Revenue Service has issued a revenue procedure indicating that this rule will apply if the total amount of cash to be distributed is not less than 20% of the total distribution. Under this revenue procedure, if
too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of distributions paid in stock). In no event will any
stockholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution such stockholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage
limitation on cash available for distribution. If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such distributions will be required to include the
full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of
our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such distributions in excess of any cash received. If a U.S. stockholder sells the
stock it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with
respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distributions, including in respect of all or a portion of such distribution that is payable in stock.
If a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock. Furthermore, with respect
to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distributions, including in respect of all or a portion of such distribution that is payable in stock. If a
significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock. Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock. The 500,000 shares that were originally issued to Solar Senior Capital Investors LLC in the Concurrent Private Placement pursuant to the exemption from
registration provided by Section 4(2) under the Securities Act were subject to a 180 day lock-up period. Upon expiration of this lock-up period,
such shares became generally freely tradable in the public market, subject to the provisions of Rule 144 promulgated under the Securities Act. Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could
adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.  42




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We have also committed to file a registration statement to register the resale of the shares of common stock
that were issued in the Concurrent Private Placement to Solar Senior Capital Investors LLC within 60 days of receiving a request from Solar Senior Capital Investors LLC to do so. We have committed to use our commercially reasonable efforts to obtain
effectiveness of such registration statement as soon as reasonably practicable after the filing of such registration statement. Assuming effectiveness of such registration statement, Solar Senior Capital Investors LLC will generally be able to
resell its shares of common stock without restriction. We may be unable to invest the net proceeds raised from any offerings on acceptable terms or
allocate net proceeds from any offering of our securities in ways with which you may not agree. We cannot assure you that we will be able to find
enough appropriate investments that meet our investment criteria or that any investment we complete using the proceeds from any securities offering will produce a sufficient return. Until we identify new investment opportunities, we intend to either
invest the net proceeds of future offerings in cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less or use the net proceeds from such offerings to reduce then-outstanding obligations. We have significant flexibility in investing the net proceeds of any offering of our securities and may use the net proceeds from an offering in ways
with which you may not agree or for purposes other than those contemplated at the time of the offering. The net asset value per share of our common
stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock. At our 2021 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our
then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth
in the proxy statement pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual Stockholders
Meeting and the date of our 2022 Annual Stockholders Meeting. However, notwithstanding such stockholder approval, since our initial public offering on February 24, 2011, we have not sold any shares of our common stock in an offering that
resulted in proceeds to us of less than our then current net asset value per share. Any offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval. We may also use newly issued shares to implement our dividend reinvestment plan, whether our shares are trading at a premium or at a discount to our then
current net asset value per share. To the extent we receive the necessary approval, any decision to sell shares of our common stock below its then current net asset value per share would be subject to the determination by our board of directors that
such issuance or sale is in our and our stockholders best interests. If we were to sell shares of our common stock below its then current net asset
value per share, such sales would result in an immediate dilution to the net asset value per share of our common stock. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our
common stock and a proportionately greater decrease in the stockholders interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such sale. Because the number of shares of common stock
that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted. Further, if our current
stockholders do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then current net asset value per share, their voting power will be diluted. For example, if we sell an
additional 10% of our common stock at a 5% discount from net asset value, a stockholder who does not participate in that offering for its proportionate interest will suffer net asset value dilution of up to 0.5% or $5 per $1,000 of net asset value.  43




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Similarly, all distributions declared in cash payable to stockholders that are participants in our dividend
reinvestment plan are automatically reinvested in shares of our common stock. As a result, stockholders that opt out of the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in
shares of common stock may experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors,
including the proportion of our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder. If we issue preferred stock, the net asset value and market value of our common stock may become more volatile. We cannot assure you that the issuance of preferred stock would result in a higher yield or return to the holders of the common stock. The issuance of
preferred stock would likely cause the net asset value and market value of the common stock to become more volatile. If the distribution rate on the preferred stock were to approach the net rate of return on our investment portfolio, the benefit of
leverage to the holders of the common stock would be reduced. If the distribution rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of common stock
than if we had not issued preferred stock. Any decline in the net asset value of our investments would be borne entirely by the holders of common stock. Therefore, if the market value of our portfolio were to decline, the leverage would result in a
greater decrease in net asset value to the holders of common stock than if we were not leveraged through the issuance of preferred stock. This greater net asset value decrease would also tend to cause a greater decline in the market price for the
common stock. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings on the preferred stock or, in an extreme case, our current investment income might not be sufficient to meet the
distribution requirements on the preferred stock. In order to counteract such an event, we might need to liquidate investments in order to fund a redemption of some or all of the preferred stock. In addition, we would pay (and the holders of common
stock would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher advisory fees if our total return exceeds the distribution rate on the preferred stock. Holders of preferred stock may
have different interests than holders of common stock and may at times have disproportionate influence over our affairs. Our board of directors is
authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners. Under Maryland General Corporation Law and our charter, our board of directors is authorized to classify and reclassify any authorized but unissued shares of
stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series, the board of directors is required by Maryland law and our charter to set the preferences, conversion or other rights, voting
powers, restrictions, limitations as to other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and
conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. The cost of any such
reclassification would be borne by our existing common stockholders. The issuance of shares of preferred stock convertible into shares of common stock might also reduce the net income and net asset value per share of our common stock upon
conversion, provided, that we will only be permitted to issue such convertible preferred stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including obtaining common stockholder approval. These effects, among
others, could have an adverse effect on your investment in our common stock. Certain matters under the 1940 Act require the separate vote of the holders
of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act provides that holders of preferred
stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. In the event  44




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distributions become two full years in arrears, holders of any preferred stock would have the right to elect a majority of the directors until such arrearage is completely eliminated. Preferred
stockholders also have class voting rights on certain matters, including changes in fundamental investment restrictions and conversion to open-end status, and accordingly can veto any such changes.
Restrictions imposed on the declarations and payment of distributions to the holders of our common stock and preferred stock, both by the 1940 Act and by requirements imposed by rating agencies or the terms of our credit facilities, might impair our
ability to maintain our qualification for tax treatment as a RIC for U.S. federal income tax purposes. While we would intend to redeem our preferred stock to the extent necessary to enable us to distribute our income as required to maintain our
qualification as a RIC, there can be no assurance that such actions could be effected in time to meet the tax requirements. To the extent we use
debt or preferred stock to finance our investments, changes in interest rates will affect our cost of capital and net investment income. To the
extent we borrow money, or issue preferred stock, to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate at which we
invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods of
rising interest rates, our cost of funds would increase, except to the extent we issue fixed rate debt or preferred stock, which could reduce our net investment income. We expect that our long-term fixed-rate investments will generally be financed
with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the
1940 Act. You should also be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our
debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our Investment Adviser with
respect to our pre-incentive fee net investment income. Further, rising interest rates could also
adversely affect our performance if we hold investments with floating interest rates, subject to specified minimum interest rates (such as a LIBOR floor), while at the same time engaging in borrowings subject to floating interest rates not subject
to such minimums. In such a scenario, rising interest rates may increase our interest expense, even though our interest income from Investments is not increasing in a corresponding manner as a result of such minimum interest rates. We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the potential for loss and the risks of
investing in us in a similar way as our borrowings. Preferred stock, which is another form of leverage, has the same risks to our common
stockholders as borrowings because the distributions on any preferred stock we issue must be cumulative. Payment of such distributions and repayment of the liquidation preference of such preferred stock must take preference over any distributions or
other payments to our common stockholders, and preferred stockholders are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference. Risks Relating to Our Business and Structure We
are dependent upon SLR Capital Partners key personnel for our future success. We depend on the diligence, skill and network of business
contacts of Messrs. Gross and Spohler, who serve as the managing partners of SLR Capital Partners and who lead SLR Capital Partners investment team. Messrs. Gross and Spohler, together with the other dedicated investment professionals
available to SLR Capital Partners, evaluate, negotiate, structure, close and monitor our investments. Our future success will depend on the  45




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diligence, skill, network of business contacts and continued service of Messrs. Gross and Spohler and the other investment professionals available to SLR Capital Partners. We cannot assure you
that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his relationship with us. The loss of Mr. Gross or Mr. Spohler, or any of the other senior investment professionals who
serve on SLR Capital Partners investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on our financial condition and results of operations. In addition, we can offer no assurance that
SLR Capital Partners will remain our Investment Adviser. The senior investment professionals of SLR Capital Partners are and may in the future become
affiliated with entities engaged in business activities similar to those intended to be conducted by us, and may have conflicts of interest in allocating their time. We expect that Messrs. Gross and Spohler will dedicate a significant portion of
their time to the activities of SLR Senior Investment Corp.; however, they may be engaged in other business activities which could divert their time and attention in the future. Specifically, Mr. Gross serves
as Co-Chief Executive Officer and President of SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC. In addition, Mr. Spohler serves
as Co-Chief Executive Officer and Chief Operating Officer of SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC. Our business model depends to a significant extent upon strong referral relationships with financial sponsors, and the inability of the senior
investment professionals of our Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business. We expect that the principals of our Investment Adviser will maintain and develop their relationships with financial sponsors, and we will rely to a
significant extent upon these relationships to provide us with potential investment opportunities. If the senior investment professionals of our Investment Adviser fail to maintain their existing relationships or develop new relationships with other
sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the senior investment professionals of our Investment Adviser have relationships are not obligated to provide
us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us. If our Investment Adviser is unable to source investment opportunities, we may hold a greater percentage
of our assets in cash and cash equivalents than anticipated, which could impact potential returns on our portfolio. A disruption in the capital
markets and the credit markets could negatively affect our business. As a BDC, we must maintain our ability to raise additional capital for
investment purposes. Without sufficient access to the capital markets or credit markets, we may be forced to curtail our business operations or we may not be able to pursue new business opportunities. Disruptive conditions in the financial industry
and the impact of new legislation in response to those conditions could restrict our business operations and could adversely impact our results of operations and financial condition. If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act and our existing
credit facilities. Any such failure could result in an event of default and all of our debt being declared immediately due and payable and would affect our ability to issue senior securities, including borrowings, and pay distributions, which could
materially impair our business operations. Our liquidity could be impaired further by an inability to access the capital markets or to draw on our credit facilities. For example, we cannot be certain that we will be able to renew our existing credit
facilities as they mature or to consummate new borrowing facilities to provide capital for normal operations, including new originations. Reflecting concern about the stability of the financial markets, many lenders and institutional investors have
reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have led to increased market volatility and widespread reduction of business activity generally.  46




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If we are unable to renew or replace our existing credit facilities and consummate new facilities on
commercially reasonable terms, our liquidity will be reduced significantly. If we consummate new facilities but are then unable to repay amounts outstanding under such facilities, and are declared in default or are unable to renew or refinance these
facilities, we would not be able to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility to the credit markets, a
severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market conditions
may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business. Our financial condition and results of operations will depend on SLR Capital Partners ability to manage our future growth effectively by
identifying, investing in and monitoring companies that meet our investment criteria. Our ability to achieve our investment objective and to grow
depends on SLR Capital Partners ability to identify, invest in and monitor companies that meet our investment criteria. Accomplishing this result on a cost-effective basis is largely a function of SLR Capital Partners structuring of the
investment process, its ability to provide competent, attentive and efficient services to us and its ability to access financing for us on acceptable terms. The investment team of SLR Capital Partners has substantial responsibilities under the
Investment Advisory and Management Agreement, and they may also be called upon to provide managerial assistance to our portfolio companies as the principals of our administrator. In addition, the members of SLR Capital Partners investment team
have similar responsibilities with respect to the management of other investment portfolios, including the investment portfolios of SLR Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC. Such demands on their time may distract
them or slow our rate of investment. In order to grow, we and SLR Capital Partners will need to retain, train, supervise and manage new investment professionals. However, we can offer no assurance that any such investment professionals will
contribute effectively to the work of the Investment Adviser. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations. We may need to raise additional capital to grow because we must distribute most of our income. We may need additional capital to fund growth in our investments. We expect to issue equity securities and expect to borrow from financial institutions in the
future. A reduction in the availability of new capital could limit our ability to grow. We must distribute at least 90% of our investment company taxable income to our stockholders to maintain our tax treatment as a RIC. As a result, any such cash
earnings may not be available to fund investment originations. We expect to borrow from financial institutions and issue additional debt and equity securities. If we fail to obtain funds from such sources or from other sources to fund our
investments, it could limit our ability to grow, which may have an adverse effect on the value of our securities. In addition, as a BDC, our ability to borrow or issue additional preferred stock may be restricted if our total assets are less than
150% of our total borrowings and preferred stock. Any failure on our part to maintain our status as a BDC would reduce our operating flexibility
and we may be limited in our investment choices as a BDC. The 1940 Act imposes numerous constraints on the operations of BDCs. For example, BDCs
are required to invest at least 70% of their total assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt
investments that mature in one year or less. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In
addition, upon approval of a majority of our stockholders, we may elect to withdraw our status as a BDC. If we decide to withdraw our election, or if we otherwise fail to qualify, or maintain our qualification, as a BDC, we may be subject to the
substantially greater regulation under the  47




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1940 Act as a closed-end investment company. Compliance with such regulations would significantly decrease our operating flexibility, and
could have a material adverse effect on our business, financial condition and results of operations. Regulations governing our operation as a BDC
affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage. In order to satisfy the tax requirements applicable to a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, we intend to
distribute to our stockholders substantially all of our ordinary income and realized net capital gains except for certain realized net long-term capital gains, which we may retain, pay applicable income taxes with respect thereto and elect to treat
as deemed distributions to our stockholders. We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities, up to the maximum amount
permitted by the 1940 Act. Under the provisions of the 1940 Act, we had been permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all
liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio effective as of
October 12, 2018. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion
of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior
securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss. In addition, because our management fee is calculated as a percentage of our gross assets, which includes any borrowings for
investment purposes, the management fee expenses will increase if we incur additional indebtedness. As of December 31, 2021, we had
$76.5 million outstanding under our senior secured revolving credit facility (the Credit Facility) and $85.0 million outstanding on our senior unsecured notes due 2025 (the 2025 Unsecured Notes). If we issue
preferred stock, the preferred stock would rank senior to common stock in our capital structure, preferred stockholders would generally vote together with common stockholders but would have separate voting rights on certain matters and
might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might
involve a premium price for holders of our common stock or otherwise be in your best interest. We are not generally able to issue and sell our common
stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our board of
directors determines that such sale is in the best interests of SLR Senior Investment Corp. and its stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less
than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). If we raise additional funds by issuing more common stock or senior
securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution. This dilution would occur as a result of a proportionately greater
decrease in a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Because the number of future shares of common stock that may be issued below our net asset
value per share and the price and timing of such issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance. We cannot determine the resulting reduction in our net asset value per share of any such issuance.
We also cannot predict whether shares of our common stock will trade above, at or below our net asset value.  48




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At our 2021 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue
shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of
directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of
the one-year anniversary of the date of the 2021 Annual Stockholders Meeting and the date of our 2022 Annual Stockholders Meeting. However, notwithstanding such stockholder approval, since our
initial public offering on February 24, 2011, we have not sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share. Any offering of our common stock that requires
stockholder approval must occur, if at all, within one year after receiving such stockholder approval. Our credit ratings may not reflect all risks
of an investment in our debt securities. Our credit ratings are an assessment by third parties of our ability to pay our obligations.
Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our publicly issued debt securities. Our credit ratings, however, may not reflect the potential impact of risks related to market conditions
generally or other factors discussed above on the market value of, or trading market for, any publicly issued debt securities. Our stockholders may
experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan. All distributions declared in cash payable to
stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock. In the event we issue new shares in connection with our dividend reinvestment plan, our stockholders that do not elect
to receive distributions in shares of common stock may experience dilution in their ownership percentage over time as a result of such issuance. We
have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing in us. We borrow money as part of our business plan. Borrowings, also known as leverage, magnify the potential for loss on amounts invested and, therefore, increase
the risks associated with investing in our securities. As of December 31, 2021, we had $76.5 outstanding under the Credit Facility and $85.0 million outstanding on our 2025 Unsecured Notes. We may borrow from and issue senior debt
securities to banks, insurance companies and other lenders in the future. Lenders of these senior securities, including the Credit Facility, the FLLP Facility, and the 2025 Unsecured Notes will have fixed dollar claims on our assets that are
superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. If the value of our assets increases, then leveraging would cause the net asset value attributable to
our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged.
Similarly, any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Also, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income
to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could also negatively affect our ability to make
distribution payments on our common stock, scheduled debt payments or other payments related to our securities. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur will depend largely on
our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to our Investment Adviser, SLR Capital Partners, will be payable based on our gross assets, including
those assets acquired through the use of leverage, SLR Capital Partners will have a financial incentive to incur leverage which may not be consistent with our stockholders interests. In addition, our common stockholders will bear the burden of
any increase in our expenses as a result of leverage, including any increase in the management fee payable to SLR Capital Partners.  49




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As a BDC, we had generally been required to meet a coverage ratio of total assets to total borrowings and
other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio
effective as of October 12, 2018. Even though we are subject to a 150% asset coverage ratio effective as of October 12, 2018, contractual leverage limitations under our existing credit facilities or future borrowings may limit our ability
to incur additional indebtedness. Some of our wholly and/or substantially owned portfolio companies, including SLR Business Credit and SLR Healthcare ABL, may incur significantly more leverage than we can but we do not consolidate SLR Business
Credit and SLR Healthcare ABL and their leverage is non-recourse to us. Additionally, our credit facilities require us to comply with certain financial and other restrictive covenants, including
maintaining an asset coverage ratio of not less than 150% at any time. Failure to maintain compliance with these covenants could result in an event of default and all of our debt being declared immediately due and payable. If this ratio declines
below 150%, we may not be able to incur additional debt and could be required by law to sell a portion of our investments to repay some debt when it is disadvantageous to do so, which could have a material adverse effect on our operations, and we
may not be able to make distributions. The amount of leverage that we employ will depend on our Investment Advisers and our board of directors assessment of market and other factors at the time of any proposed borrowing. We cannot assure
you that we will be able to obtain credit at all or on terms acceptable to us. In addition, our credit facilities impose, and any other debt facility
into which we may enter would likely impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions
required to maintain RIC tax treatment under Subchapter M of the Code. The debt securities that we may issue will be governed by an indenture or other
instrument containing covenants restricting our operating flexibility. We, and indirectly our stockholders, bear the cost of issuing and servicing such debt securities. Any convertible or exchangeable securities that we issue in the future may have
rights, preferences and privileges more favorable than those of our common stock. Illustration. The following table illustrates the effect of
leverage on returns from an investment in our common stock assuming various annual returns on our portfolio, net of interest expense. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing
in the table below.  Assumed total return(net of interest expense)(10)%


(5)%


0%


5%


10%Corresponding return to stockholder(1)


(25.3
)%


(13.8
)%


(2.2
)%


9.4
%


20.9
%  (1)
Assumes $572.9 million in total assets and $161.5 million in total debt outstanding, which reflects
our total assets and total debt outstanding as of December 31, 2021, and a cost of funds of 3.36%. Excludes non-leverage related expenses. In order for us to cover our annual interest payments on our outstanding indebtedness at December 31, 2021, we must achieve annual returns on our
December 31, 2021 total assets of at least 0.9%. It is likely that the terms of any current or future long-term or revolving credit or
warehouse facility we may enter into in the future could constrain our ability to grow our business. Our current lenders have, and any future
lender or lenders may have, fixed dollar claims on our assets that are senior to the claims of our stockholders and, thus, will have a preference over our stockholders with respect to our assets in the collateral pool. Our current credit facilities
and borrowings also subject us to various financial and operating covenants, including, but not limited to, maintaining certain financial ratios and minimum tangible net worth amounts. Future credit facilities and borrowings will likely subject us
to similar or additional covenants. In addition, we may grant a security interest in our assets in connection with any such credit facilities and borrowings.  50




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Our credit facilities generally contain customary default provisions such as a minimum net worth amount, a
profitability test, and a restriction on changing our business and loan quality standards. In addition, our credit facilities require or are expected to require the repayment of all outstanding debt on the maturity which may disrupt our business and
potentially the business of our portfolio companies that are financed through our credit facilities. An event of default under our credit facilities would likely result, among other things, in termination of the availability of further funds under
our credit facilities and accelerated maturity dates for all amounts outstanding under our credit facilities, which would likely disrupt our business and, potentially, the business of the portfolio companies whose loans we finance through our credit
facilities. This could reduce our revenues and, by delaying any cash payment allowed to us under our credit facilities until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and
maintain RIC tax treatment. The terms of future available financing may place limits on our financial and operation flexibility. If we are unable to
obtain sufficient capital in the future, we may be forced to reduce or discontinue our operations, not be able to make new investments, or otherwise respond to changing business conditions or competitive pressures. Our quarterly and annual operating results are subject to fluctuation as a result of the nature of our business, and if we fail to achieve our
investment objective, the net asset value of our common stock may decline. We could experience fluctuations in our quarterly and annual operating
results due to a number of factors, some of which are beyond our control, including, but not limited to, the interest rate payable on the debt securities that we acquire, the default rate on such securities, the level of our expenses, variations in
and the timing of the recognition of realized and unrealized gains or losses, changes in our portfolio composition, the degree to which we encounter competition in our markets, market volatility in our publicly traded securities and the securities
of our portfolio companies, and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. In addition, any of these factors could negatively
impact our ability to achieve our investment objectives, which may cause our net asset value of our common stock to decline. Our investments may be
in portfolio companies that may have limited operating histories and financial resources. We expect that our portfolio will continue to consist of
investments that may have relatively limited operating histories. These companies may be particularly vulnerable to U.S. and foreign economic downturns such as the U.S. recession that began
in mid-2007, the European financial crisis, and the COVID-19 related economic downturn, may have more limited access to capital and higher funding
costs, may have a weaker financial position and may need more capital to expand or compete. These businesses also may experience substantial variations in operating results. They may face intense competition, including from companies with greater
financial, technical and marketing resources. Furthermore, some of these companies do business in regulated industries and could be affected by changes in government regulation. Accordingly, these factors could impair their cash flow or result in
other events, such as bankruptcy, which could limit their ability to repay their obligations to us, and may adversely affect the return on, or the recovery of, our investment in these companies. We cannot assure you that any of our investments in
our portfolio companies will be successful. Our portfolio companies compete with larger, more established companies with greater access to, and resources for, further development in these new technologies. Therefore, we may lose our entire
investment in any or all of our portfolio companies. There will be uncertainty as to the value of our portfolio investments, which may impact our
net asset value. A large percentage of our portfolio investments are in the form of securities that are not publicly traded. The fair value of
securities and other investments that are not publicly traded may not be readily determinable. We value these securities on a quarterly basis in accordance with our valuation policy, which is at all times consistent with U.S. generally accepted
accounting principles (GAAP). Our board of directors utilizes the services of third-party  51




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valuation firms to aid it in determining the fair value of material assets. The board of directors discusses valuations and determines the fair value in good faith based on the input of our
Investment Adviser and, when utilized, the respective third-party valuation firms. The factors that may be considered in fair value pricing our investments include the nature and realizable value of any collateral, the portfolio companys
ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of
private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready
market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such
securities. Our equity ownership in a portfolio company may represent a control investment. Our ability to exit an investment in a timely manner
because we are in a control position or have access to inside information in the portfolio company could result in a realized loss on the investment. If we obtain a control investment in a portfolio company our ability to divest ourselves from a debt or equity investment could be restricted due to
illiquidity in a private stock, limited trading volume on a public companys stock, inside information on a companys performance, insider blackout periods, or other factors that could prohibit us from disposing of the investment as we
would if it were not a control investment. Additionally, we may choose not to take certain actions to protect a debt investment in a control investment portfolio company. As a result, we could experience a decrease in the value of our portfolio
company holdings and potentially incur a realized loss on the investment. There are significant potential conflicts of interest, including SLR
Capital Partners management of other investment funds such as SLR Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in SLR Senior Investment Corp. is not an
investment in SLR Investment Corp., SCP Private Credit Income BDC LLC, or SLR HC BDC LLC. Our executive officers and directors, as well as the
current and future partners of our Investment Adviser, SLR Capital Partners, may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do. For example, SLR Capital Partners, presently
serves as the Investment Adviser to (i) SLR Investment Corp., a publicly-traded BDC whose principal focus is to invest in senior secured loans, and to a lesser extent unsecured loans and equity securities, (ii) SCP Private Credit Income
BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans, and (iii) SLR HC BDC LLC, an unlisted BDC
whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry. In addition, Michael S. Gross, our
Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer and board member, and
Richard L. Peteka, our Chief Financial Officer, serve in similar capacities for SLR Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC. Accordingly, they may have obligations to investors in those entities, the
fulfillment of which obligations might not be in the best interests of us or our stockholders. In addition, we note that any affiliated investment vehicle formed in the future, and managed by our Investment Adviser or its affiliates may,
notwithstanding different stated investment objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. As a result, SLR Capital Partners may face conflicts in
allocating investment opportunities between us and such other entities. Although SLR Capital Partners will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the
opportunity to participate in investments made by investment funds managed by our Investment Adviser or an investment manager affiliated with our Investment Adviser. In any such case, when SLR Capital Partners identifies an investment, it will be
forced to choose which investment fund should make the investment.  52




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As a BDC, we were substantially limited in our ability
to co-invest in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC. The most recent exemptive order, received on June 13, 2017 (the
Exemptive Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is
controlled by or is under common control with SLR Capital Partners and is registered as an Investment Adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as
regulatory requirements and other pertinent factors, and pursuant to the conditions to the Exemptive Order. If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose
investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis. Although our investment
professionals will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles
managed or sponsored by, or affiliated with, our executive officers, directors and members of our Investment Adviser. SLR Capital Partners and certain
investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, SLR Capital Partners or
its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the
SEC and its staff, and consistent with SLR Capital Partners allocation procedures. Related party transactions may occur among SLR Senior Investment Corp., SLR Business Credit and SLR Healthcare ABL. These transactions may occur in the normal
course of business. No administrative or other fees are paid to SLR Capital Partners by SLR Business Credit and SLR Healthcare ABL. In the ordinary
course of our investing activities, we pay management and incentive fees to SLR Capital Partners and reimburse SLR Capital Partners for certain expenses it incurs. As a result, investors in our common stock will invest on a gross basis
and receive distributions on a net basis after expenses, resulting in a lower rate of return than an investor might achieve through direct investments. Accordingly, there may be times when the management team of SLR Capital Partners has
interests that differ from those of our stockholders, giving rise to a conflict. We have entered into an amended and restated royalty-free license
agreement on February 25, 2021 with our Investment Adviser, pursuant to which our Investment Adviser has granted us a non-exclusive license to use the marks SOLAR and
SLR. Under the license agreement, we have the right to use the SLR Senior Investment name for so long as SLR Capital Partners or one of its affiliates remains our Investment Adviser. In addition, we pay SLR Capital
Management, an affiliate of SLR Capital Partners, our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses
associated with performing compliance functions, and our allocable portion of the compensation of our chief compliance officer and our chief financial officer and their respective staffs. These arrangements create conflicts of interest that our
board of directors must monitor. Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited. Through comprehensive new global regulatory regimes impacting derivatives (e.g., the Dodd-Frank Act, European Market Infrastructure
Regulation (EMIR), Markets in Financial Investments Regulation (MIFIR)/Markets in Financial Instruments Directive (MIFID II)),
certain over-the-counter derivatives transactions in which we may engage are either now or will soon be subject to various requirements, such as mandatory
central clearing of transactions which include additional margin requirements and in certain cases trading on electronic platforms, pre-and post-trade transparency reporting requirements and mandatory bi-lateral exchange of initial margin for non-cleared swaps. The Dodd-Frank Act also created new categories of regulated market participants,
such as swap dealers, security-based swap dealers, major swap participants, and major security-based  53




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swap participants who are subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements. The EU and some other
jurisdictions are implementing similar requirements. Because these requirements are new and evolving (and some of the rules are not yet final), their ultimate impact remains unclear. However, even if the Company itself is not located in a particular
jurisdiction or directly subject to the jurisdictions derivatives regulations, we may still be impacted to the extent we enter into a derivatives transaction with a regulated market participant or counterparty that is organized in that
jurisdiction or otherwise subject to that jurisdictions derivatives regulations. Based on information available as of the date of this annual
report on Form 10-K, the effect of such requirements will be likely to (directly or indirectly) increase our overall costs of entering into derivatives transactions. In particular, new margin
requirements, position limits and significantly higher capital charges resulting from new global capital regulations, even if not directly applicable to us, may cause an increase in the pricing of derivatives transactions entered into by market
participants to whom such requirements apply or affect our overall ability to enter into derivatives transactions with certain counterparties. Such new global capital regulations and the need to satisfy the various requirements by counterparties are
resulting in increased funding costs, increased overall transaction costs, and significantly affecting balance sheets, thereby resulting in changes to financing terms and potentially impacting our ability to obtain financing. Administrative costs,
due to new requirements such as registration, recordkeeping, reporting, and compliance, even if not directly applicable to us, may also be reflected in our derivatives transactions. New requirements to trade certain derivatives transactions on
electronic trading platforms and trade reporting requirements may lead to (among other things) fragmentation of the markets, higher transaction costs or reduced availability of derivatives, and/or a reduced ability to hedge, all of which could
adversely affect the performance of certain of our trading strategies. In addition, changes to derivatives regulations may impact the tax and/or accounting treatment of certain derivatives, which could adversely impact us. In November 2020, the SEC adopted new rules regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that
create future payment or delivery obligations. BDCs that use derivatives would be subject to a value-at-risk leverage limit, certain other derivatives risk
management program and testing requirements and requirements related to board reporting. These new requirements would apply unless the BDC qualified as a limited derivatives user, as defined in the SECs adopted rules. A BDC that
enters into reverse repurchase agreements or similar financing transactions would need to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions could either (i) comply with the
asset coverage requirements of the Section 18 of the 1940 Act when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivative transactions under the adopted rule. Under the adopted rule, a BDC may enter
into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have
sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives
transaction subject to the requirements of the rule. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts. We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss. Our Investment Adviser will be entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting incentive compensation) above a performance threshold for that quarter. Accordingly, since the performance threshold is based
on a percentage of our net asset value, decreases in our net asset value make it easier to achieve the performance threshold. Our pre-incentive fee net investment income for incentive compensation
purposes excludes realized and unrealized capital losses or depreciation that we may incur in the fiscal quarter, even if such capital losses or depreciation result in a net loss on our statement of operations for that quarter. Thus, we may be
required to pay SLR Capital Partners incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.  54




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Our incentive fee may induce SLR Capital Partners to pursue speculative investments. The incentive fee payable by us to SLR Capital Partners may create an incentive for SLR Capital Partners to pursue investments on our behalf that are riskier
or more speculative than would be the case in the absence of such compensation arrangement. The incentive fee payable to our Investment Adviser is calculated based on a percentage of our return on invested capital. This may encourage our Investment
Adviser to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock. In addition, our Investment Adviser
receives the incentive fee based, in part, upon net capital gains realized on our investments. Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital
gains. As a result, our Investment Adviser may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more
speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns. The
incentive fee payable by us to our Investment Adviser also may induce SLR Capital Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would not provide cash necessary to enable us to
pay current distributions to our stockholders. Under these investments, we would accrue interest over the life of the investment but would not receive the cash income from the investment until the end of the term. Our net investment income used to
calculate the income portion of our investment fee, however, includes accrued interest. Thus, a portion of this incentive fee would be based on income that we have not received in cash. In addition,
the catch-up portion of the incentive fee may encourage SLR Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to another,
potentially resulting in fluctuations in timing and distribution amounts. We may invest, to the extent permitted by law, in the securities and
instruments of other investment companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such investment companys expenses, including management and performance fees. We will also remain obligated
to pay management and incentive fees to SLR Capital Partners with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our stockholders will bear his or
her share of the management and incentive fee of SLR Capital Partners as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest. We may become subject to corporate-level U.S. federal income tax if we are unable to qualify and maintain our qualification for tax treatment as a
regulated investment company under Subchapter M of the Code. Although we have elected to be treated as a RIC under Subchapter M of the Code, no
assurance can be given that we will continue to be able to qualify for and maintain RIC tax treatment. To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification
requirements.  

The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an annual
basis at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Because we may use debt financing, we are subject to certain asset coverage ratio requirements under
the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other
sources, we could fail to qualify for RIC tax treatment and become subject to corporate-level U.S. federal income tax.  

The income source requirement will be satisfied if we obtain at least 90% of our income for each year from
certain passive investments, including interest, dividends, gains from the sale of stock or securities or similar sources.  55




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

The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at
the end of each quarter of our taxable year. Failure to meet those requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC tax treatment. Because most of our investments will be in private
companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. If we fail to qualify for RIC tax treatment for any reason and become subject to corporate income tax, the resulting corporate taxes could substantially
reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure could have a material adverse effect on us, the net asset value of our common stock and the total return, if any, obtainable
from your investment in our common stock. We may have difficulty satisfying the Annual Distribution Requirement in order to qualify and maintain
RIC tax treatment if we recognize income before or without receiving cash representing such income. In accordance with GAAP and tax requirements,
we include in income certain amounts that we have not yet received in cash, such as contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loans term. In addition to the cash yields
received on our loans, in some instances, certain loans may also include any of the following: end-of-term payments, exit fees, balloon payment fees or
prepayment fees. The increases in loan balances as a result of contractual PIK arrangements are included in income for the period in which such PIK interest was accrued, which is often in advance of receiving cash payment, and are separately
identified on our statements of cash flows. We also may be required to include in income certain other amounts prior to receiving the related cash. Any
warrants that we receive in connection with our debt investments will generally be valued as part of the negotiation process with the particular portfolio company. As a result, a portion of the aggregate purchase price for the debt investments and
warrants will be allocated to the warrants that we receive. This will generally result in original issue discount for U.S. federal income tax purposes, which we must recognize as ordinary income, increasing the amount that we are
required to distribute to qualify for the U.S. federal income tax benefits applicable to RICs. Because these warrants generally will not produce distributable cash for us at the same time as we are required to make distributions in respect of the
related original issue discount, we would need to obtain cash from other sources or to pay a portion of our distributions using shares of newly issued common stock, consistent with Internal Revenue Service requirements, to satisfy the Annual
Distribution and Excise Tax Avoidance requirements. Other features of the debt instruments that we hold may also cause such instruments to generate
original issue discount, resulting in a distribution requirement in excess of current cash interest received. Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting
the RIC tax requirement to distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Under such circumstances, we may have to sell some of our investments
at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are unable to obtain cash from other sources and are otherwise unable to
satisfy such distribution requirements, we may fail to qualify for the U.S. federal income tax benefits allowable to RICs and, thus, become subject to a corporate-level U.S. federal income tax on all our income. Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price
of our common stock. The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more
difficult a change in control of SLR Senior Investment Corp. or the removal of our directors.  56




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We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. Our board of directors has adopted a resolution exempting from the Maryland
Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board of directors, including approval by a majority of our disinterested directors. If the resolution
exempting business combinations is repealed or our board of directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of
consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act (the Control Share Act) acquisitions of our stock by any person. If we amend our bylaws to repeal the exemption from the Control Share Act, the
Control Share Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction. The SEC staff has rescinded its position that, under the 1940 Act, an investment company may
not avail itself of the Control Share Act. As a result, we will amend our bylaws to be subject to the Control Share Act only if our board of directors determines that it would be in our best interests. We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our board
of directors in three classes serving staggered three-year terms, and authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series, to cause the issuance of additional shares of our stock and , to
amend our charter without stockholder approval to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction
or a change in control that might otherwise be in the best interests of our stockholders. The foregoing provisions are expected to discourage certain
coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of directors. However, these provisions may deprive a stockholder of the opportunity to sell such
stockholders shares at a premium to a potential acquirer. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such
proposals may improve their terms. Our board of directors has considered both the positive and negative effects of the foregoing provisions and determined that they are in the best interest of our stockholders. Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that
may be initiated by our stockholders and provide that claims relating to causes of action under the Securities Act may only be brought in federal district courts, which could limit our stockholders ability to obtain a favorable
judicial forum for disputes with us or our directors, officers or agents, if any, and could discourage lawsuits against us and our directors, officers and agents, if any. Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that
court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, (b) any
derivative action or proceeding brought on our behalf (other than actions arising under federal securities laws), (c) any action asserting a claim of breach of any duty owed by any of our directors, officers or other agents to us or to our
stockholders, (d) any action asserting a claim against us or any of our directors, officers or other agents arising pursuant to any provision of the MGCL or our charter or bylaws or (e) any other action asserting a claim against us or any
of our directors, officers or other employees that is governed by the internal affairs doctrine. With respect to any proceeding described in the foregoing sentence that is in the Circuit Court for Baltimore City, Maryland, our stockholders consent
to the assignment of the proceeding to the Business and Technology Case Management Program pursuant to Maryland Rule 16-308 or any successor thereof. None of the foregoing actions, claims or proceedings may be
brought in any court sitting outside the State of Maryland unless we consent in writing to such court. Our bylaws do not apply to lawsuits asserting claims brought to enforce a duty or liability arising exclusively under the Securities Act, the
Exchange Act, or the 1940 Act, or any other claim for which the federal courts have exclusive jurisdiction.  57




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Unless we consent in writing to the selection of an alternative forum, the federal district courts of the
United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This paragraph does not apply to claims arising
exclusively under the Exchange Act or the 1940 Act, or any other claim for which the federal courts have exclusive jurisdiction. These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that
such stockholders find favorable for disputes with us or our directors, officers, or agents, if any, which may discourage such lawsuits against us and our directors, officers, and agents, if any. Alternatively, if a court were to find the choice of
forum provisions contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial
condition, and operating results. For example, under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance with
the federal securities laws and the rules and regulations thereunder. The failure in cyber security systems, as well as the occurrence of events
unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively. The
occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error,
could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This adverse effect can become particularly acute if those events affect our electronic data processing,
transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data. We depend heavily upon computer
systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use,
alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering. If one or more of these events occurs, it could potentially jeopardize the
confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems and networks. Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses,
litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and remediation. If unauthorized parties gain access to such information and technology systems, they
may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to stockholders (and their beneficial owners) and material nonpublic information. The systems we have implemented to
manage risks relating to these types of events could prove to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately secure private information. Breaches such as
those involving covertly introduced malware, impersonation of authorized users and industrial or other espionage maynot be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and
preventing them from being addressed appropriately. The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in our and our Advisers operations and result in a failure to maintain the
security, confidentiality or privacy of sensitive data, including personal information relating to stockholders, material nonpublic information and other sensitive information in our possession. A disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used
by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption. Our disaster recovery programs may not be
sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at all.  58




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Third parties with which we do business may also be sources of cybersecurity or other technological risk. We
outsource certain functions and these relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information. While we engage in actions to reduce our exposure resulting from
outsourcing, ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above. In addition, cybersecurity has become a top priority for global lawmakers and regulators around the world, and some jurisdictions have proposed or enacted
laws requiring companies to notify regulators and individuals of data security breaches involving certain types of personal data. If we fail to comply with the relevant and increasing laws and regulations, we could suffer financial losses, a
disruption of our businesses, liability to investors, regulatory intervention or reputational damage. We and our service providers are currently impacted
by quarantines and similar measures being enacted by governments in response to the global COVID-19 pandemic, which are obstructing the regular functioning of business workforces (including requiring
employees to work from external locations and their homes). Policies of extended periods of remote working, whether by us or by our Service Providers, could strain technology resources, introduce operational risks and otherwise heighten the risks
described above. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.
Accordingly, the risks described above are heightened under current conditions. We, our Investment Adviser and our portfolio companies are subject
to risks associated with phishing and other cyber-attacks. Our business and the business of our portfolio companies relies upon secure
information technology systems for data processing, storage and reporting. Despite careful security and controls design, implementation and updating, ours and our portfolio companies information technology systems could become subject to
cyber-attacks. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through hacking, malicious software coding, social engineering or phishing attempts) for purposes of
misappropriating assets or sensitive information, corrupting data, or causing operational disruption. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, nation-state
affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Cyber-attacks may also be carried out in a manner that does not
require gaining unauthorized access, such as causing denial-of service attacks on websites (i.e., efforts to make network services unavailable to intended users). Our Investment Advisers employees have
been and expect to continue to be the target of fraudulent calls, emails and other forms of potentially malicious or otherwise negatively impacting activities. The result of these incidents may include disrupted operations, misstated or unreliable
financial data, liability for stolen information, misappropriation of assets, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, regulatory fines or penalties, or other adverse effects on our
business, financial condition or results of operations. In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities or other exposures arising from
operational and security risks related to cyber-attacks. Our Investment Advisers and other service providers increased use of mobile and
cloud technologies could heighten the risk of a cyber-attack as well as other operational risks, as certain aspects of the security of such technologies may be complex, unpredictable or beyond their control. Our Investment Advisers and other
service providers reliance on mobile or cloud technology or any failure by mobile technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt their operations and result in
misappropriation, corruption or loss of personal, confidential or proprietary information. In addition, there is a risk that encryption and other protective measures against cyber-attacks may be circumvented,  59




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particularly to the extent that new computing technologies increase the speed and computing power available. Even the most well-protected information, networks, systems and facilities remain
potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us and our service providers to entirely mitigate this
risk. Cybersecurity risks require continuous and increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies, systems and processes to adequately address such
risks. Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective. Additionally,
remote working environments may be less secure and more susceptible to cyber-attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic. Accordingly, the risks
associated with cyber-attacks are heightened under current conditions. We can be highly dependent on information systems and systems failures could
significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay distributions. Our business is highly dependent on our and third parties communications and information systems. Any failure or interruption of those systems, including
as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to
operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:  

sudden electrical or telecommunications outages;  

natural disasters such as earthquakes, tornadoes and hurricanes;  

events arising from local or larger scale political or social matters, including terrorist acts; and  

cyber-attacks. These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our
ability to pay distributions to our stockholders. Our board of directors may change our investment objective, operating policies and strategies
without prior notice or stockholder approval. Our board of directors has the authority to modify or waive certain of our operating policies and
strategies without prior notice (except as required by the 1940 Act) and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as a BDC. We
cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and value of our stock. Nevertheless, the effects may adversely affect our business and impact our ability to make
distributions. Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could
adversely affect our business and financial results. We are subject to changing rules and regulations of federal and state government as well as
the stock exchange on which our common stock is listed. These entities, including the Public Company Accounting Oversight Board, the SEC and the NASDAQ Stock Market, have issued a significant number of new and increasingly complex requirements and
regulations over the course of the last several years and continue to develop additional  60




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regulations and requirements in response to laws enacted by Congress. Our efforts to comply with these existing requirements, or any revised or amended requirements, have resulted in, and are
likely to continue to result in, an increase in expenses and a diversion of managements time from other business activities. Changes in laws
or regulations governing our operations may adversely affect our business. Changes in the laws or regulations, or the interpretations of the laws
and regulations, which govern BDCs, RICs or non-depository commercial lenders could significantly affect our operations and our cost of doing business. We are subject to federal, state and local laws
and regulations and are subject to judicial and administrative decisions that affect our operations, including our loan originations, maximum interest rates, fees and other charges, disclosures to portfolio companies, the terms of secured
transactions, collection and foreclosure procedures, and other trade practices. If these laws, regulations or decisions change, or if we expand our business into jurisdictions that have adopted more stringent requirements than those in which we
currently conduct business, then we may have to incur significant expenses in order to comply or we may have to restrict our operations. In addition, if we do not comply with applicable laws, regulations and decisions, then we may lose licenses
needed for the conduct of our business and be subject to civil fines and criminal penalties, any of which could have a material adverse effect upon our business results of operations or financial condition. Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us. There has been ongoing discussion and commentary regarding potential significant changes to United States trade policies, treaties and tariffs. The
current administration, along with Congress, has created significant uncertainty about the future relationship between the United States and other countries with respect to the trade policies, treaties and tariffs. These developments, or the
perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations
and the United States. Any of these factors could depress economic activity and restrict our portfolio companies access to suppliers or customers and have a material adverse effect on their business, financial condition and results of
operations, which in turn would negatively impact us. Our Investment Adviser can resign on 60 days notice, and we may not be able to find a
suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations. Our Investment Adviser has the right, under the Investment Advisory and Management Agreement, to resign at any time upon 60 days written notice, whether
we have found a replacement or not. If our Investment Adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms
within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely
affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of
executives having the expertise possessed by our Investment Adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our
investment objective may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations. General Risk Factors Volatility or a prolonged
disruption in the credit markets could materially damage our business. We are required to record our assets at fair value, as determined in good
faith by our board of directors, in accordance with our valuation policy. As a result, volatility in the capital markets may have a material adverse  61




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effect on our valuations and our net asset value, even if we hold investments to maturity. Volatility or dislocation in the capital markets may depress our stock price below our net asset value
per share and create a challenging environment in which to raise equity and debt capital. These conditions could continue for a prolonged period of time or worsen in the future. While these conditions persist, we and other companies in the financial
services sector may have to access, if available, alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some limited exceptions which apply to us, as a BDC we are generally not able to issue
additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. At our 2021 Annual Stockholders Meeting, our stockholders approved our
ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case
subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual Stockholders Meeting and the date of our 2022 Annual Stockholders Meeting. However, notwithstanding such stockholder approval, since our initial
public offering on February 24, 2011, we have not sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share. Any offering of our common stock that requires
stockholder approval must occur, if at all, within one year after receiving such stockholder approval. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset
coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness. The debt capital that will be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future.
Any inability to raise capital could have a negative effect on our business, financial condition and results of operations. Additionally, our ability to
incur indebtedness is limited by the asset coverage ratio for a BDC, as defined under the 1940 Act. Declining portfolio values negatively impact our ability to borrow additional funds because our net asset value is reduced for purposes of the asset
coverage ratio. If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratio stipulated by the 1940 Act, which could, in turn, cause us to lose our status as a BDC and materially impair our business
operations. A lengthy disruption in the credit markets could also materially decrease demand for our investments. The significant disruption in the
capital markets experienced in the past, including the disruption caused by the COVID-19 pandemic, has had, and may in the future have, a negative effect on the valuations of our investments and on
the potential for liquidity events involving our investments. The debt capital that may be available to us in the future may be at a higher cost and have less favorable terms and conditions than those currently in effect. If our financing costs
increase and we have no increase in interest income, then our net investment income will decrease. A prolonged inability to raise capital may require us to reduce the volume of investments we originate and could have a material adverse impact on our
business, financial condition and results of operations. This may also increase the probability that other structural risks negatively impact us. These situations may arise due to circumstances that we may be unable to control, such as a lengthy
disruption in the credit markets, a severe decline in the value of the U.S. dollar, a sharp economic downturn or recession or an operational problem that affects third parties or us, and could materially damage our business, financial condition and
results of operations. Adverse developments in the credit markets may impair our ability to secure debt financing. In past economic downturns, such as the financial crisis in the United States that
began in mid-2007 and during other times of extreme market volatility, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending
activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited routine refinancing and loan modification transactions and even reviewed the terms of
existing facilities to identify bases for accelerating the maturity of existing lending facilities. If these conditions recur, for example as a result of the COVID-19  62




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pandemic, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all. So far, the COVID-19 pandemic has resulted in among other things, increased draws by borrowers on
revolving lines of credit and increased requests by borrowers for amendments, modifications and waivers of their credit agreements to avoid default or change payment terms, increased defaults by such borrowers and/or increased difficulty in
obtaining refinancing at the maturity dates of their loans. In addition, the duration and effectiveness of responsive measures implemented by governments and central banks cannot be predicted. The commencement, continuation, or cessation of
government and central bank policies and economic stimulus programs, including changes in monetary policy involving interest rate adjustments or governmental policies, may contribute to the development of or result in an increase in market
volatility, illiquidity and other adverse effects that could negatively impact the credit markets and the Company. If we are unable to consummate credit
facilities on commercially reasonable terms, our liquidity may be reduced significantly. If we are unable to repay amounts outstanding under any facility we may enter into and are declared in default or are unable to renew or refinance any such
facility, it would limit our ability to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility of the credit
markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market
conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business. Global economic, regulatory and market conditions may adversely affect our business, results of operations and financial condition, including our
revenue growth and profitability. We and our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels.
These laws and regulations, as well as their interpretation, could change from time to time, including as the result of interpretive guidance or other directives from the U.S. President and others in the executive branch, and new laws, regulations
and interpretations could also come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business, and political uncertainty could increase regulatory uncertainty in the near term. The effects of legislative and regulatory proposals directed at the financial services industry or affecting taxation, could negatively impact the operations,
cash flows or financial condition of us and our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the
business of our portfolio companies. In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of business and could be subject to civil fines and criminal penalties. Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector,
raising the possibility that some portion of the non-bank financial sector will be subject to new regulation. While it cannot be known at this time whether any regulation will be implemented or what
form it will take, increased regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory
supervision of us or otherwise adversely affect our business, financial condition and results of operations. Although we cannot predict the impact, if
any, of these changes to our business, they could adversely affect our business, financial condition, operating results and cash flows. Until we know what policy changes are made and how those changes impact business and the business of our
competitors over the long term, we will not know if, overall, it will benefit from them or be negatively affected by them. In 2010, a financial crisis
emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service their sovereign  63




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debt obligations. Risks resulting from such debt crisis, including any austerity measures taken in exchange for bailout of certain nations, and any future debt crisis in Europe or any similar
crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions
generally. In addition on January 31, 2020, the United Kingdom (UK) ended its membership in the European Union (EU) referred to as Brexit (Brexit). Following the termination of a transition period, the UK and
the EU entered into a trade and cooperation agreement to govern the future relationship between the parties, which was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021 following ratification by the EU. With
respect to financial services, the agreement leaves decisions on equivalence and adequacy to be determined by each of the U.K. and EU unilaterally in due course. As a result, certain UK licensed entities are unable to provide regulated services in a
number of EU jurisdictions from the end of December 2020, absent regulatory relief or other measures implemented by individual countries. Such agreement is untested and may lead to ongoing political and economic uncertainty and periods of
exacerbated volatility in both the United Kingdom and in wider European and global markets for some time. The longer term economic, legal, political and social implications of Brexit are unclear at this stage. Brexit has led to ongoing political and
economic uncertainty and periods of increased volatility in both the UK and in wider European markets for some time. Brexit could lead to calls for similar referendums in other European jurisdictions, which could cause increased economic volatility
in the European and global markets. This mid- to long-term uncertainty could have adverse effects on the economy generally and on our ability to earn attractive returns. In particular, currency volatility
could mean that our returns are adversely affected by market movements and could make it more difficult, or more expensive, for us to execute prudent currency hedging policies. Potential decline in the value of the British Pound and/or the Euro
against other currencies, along with the potential further downgrading of the UKs sovereign credit rating, could also have an impact on the performance of certain investments made in the UK or Europe. Events such as war, terrorism and related
geopolitical risks have led, and may in the future lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Those events could also have an acute effect on individual
issuers or related groups of issuers. These risks could also adversely affect individual issuers and securities markets, interest rates, auctions, secondary trading, ratings, credit risk, inflation, deflation and other factors relating to the
Companys investments. Various social and political circumstances in the U.S. and around the world (including wars and other forms of conflict,
terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the
U.S. and worldwide. Such events, including rising trade tensions between the United States and China, other uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies with other countries, escalating
military conflict between Russia and Ukraine, and the COVID-19 pandemic, could adversely affect our business, financial condition or results of operations. These market and economic disruptions could
negatively impact the operating results of our portfolio companies. Additionally, the Federal Reserve may raise, or may announce its intention to raise,
the Federal Funds Rate in 2022. These developments, along with the United States governments credit and deficit concerns, global economic uncertainties and market volatility and the impacts of COVID-19,
could cause interest rates to be volatile, which may negatively impact our ability to access the debt markets and capital markets on favorable terms. Events outside of our control, including the COVID-19 public health crises, could negatively affect our
portfolio companies and our results of our operations. Periods of market volatility have occurred and could continue to occur in response to
pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. For example,
the COVID-19 pandemic has delivered a shock to the global economy throughout much of 2020 and 2021. This outbreak has led and for an unknown period of time will continue to lead to disruptions in
local, regional, national and global markets and economies affected thereby, including a recession and a steep increase in unemployment in the United States.  64




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With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted
in, and until fully resolved may continue to result in, the following among other things: (i) government imposition of various forms of
shelter-in-place orders and the closing of non-essential businesses, resulting in
significant disruption to the businesses of many middle-market loan borrowers including supply chain interruptions, increased inflationary pressure, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while
these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit
agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing
and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets
and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. During 2021, the economic recovery gained significant traction in countries in which comprehensive vaccination programs have led to the lifting of health and
safety restrictions. However, other countries encountered more challenging circumstances as a result of slower distribution of vaccines and the spread of new variants, most notably the Delta and Omicron variants. The extent to which the COVID-19 pandemic will continue to affect our business, financial condition, liquidity, our portfolio companies results of operations and by extension our operating results will depend on future developments,
such as the speed and extent of further vaccine distribution and the impact of the Delta and Omicron variants or other variants that might arise, which are highly uncertain and cannot be predicted. Additionally, as of February 2022, travelers from
the United States are not allowed to visit Australia or certain countries in Europe, Asia, Africa and South America. These continued travel restrictions may prolong the global economic downturn. Even after the
COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected
by a prolonged recession in the United States and other major markets. This outbreak is having, and any future outbreaks could have, an adverse impact on
the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted
to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things. As of the date of this annual
report on Form 10-K, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental
actions will have or the full potential impact on us and our portfolio companies. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and
severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio
companies operating results. If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of
time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses to
increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a
decrease in loan collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations. Central banks and governments have
responded with liquidity injections to ease the strain on financial systems and stimulus measures to buffer the shock to businesses and consumers. These measures have helped stabilize certain portions of the financial markets over the short term,
but volatility will likely remain elevated until the health crisis itself is under control (via fewer new cases, lower  65




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infection rates and/or verified treatments). There are still many unknowns and new information is incoming daily, compounding the difficulty of modeling outcomes for epidemiologists and
economists alike. We cannot be certain as to the duration or magnitude of the economic impact of
the COVID-19 pandemic in the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary,
suggested, or mandated by law) and corresponding declines in economic activity that may negatively impact the U.S. economy and the markets for the various types of goods and services provided by U.S. middle market companies. Depending on the
duration, magnitude and severity of these conditions and their related economic and market impacts, certain portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default on their
financial obligations to us and their other lenders. We will also be negatively affected if our operations and effectiveness or the operations and
effectiveness of a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted. Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or
new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments. Our valuations, and particularly valuations of private
investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of the COVID-19 pandemic and the resulting measures taken in response thereto. These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results. We are currently operating in a period of capital markets disruption and economic uncertainty. The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak
of COVID-19 that began in December 2019. The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure of
offices, businesses, schools, retail stores and other public venues. Businesses are also implementing similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact
of COVID-19, have created significant disruption in supply chains and economic activity. The impact of COVID-19 has led to significant volatility and
declines in the global public equity markets and it is uncertain how long this volatility will continue. As COVID-19 continues to spread, the potential impacts, including a global, regional
or other economic recession, are increasingly uncertain and difficult to assess. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. General uncertainty surrounding the dangers and impact of COVID-19 (including the preventative measures
taken in response thereto and additional uncertainty regarding new variants of COVID-19 that continue to emerge throughout the world) has to date created significant disruption in supply chains and
economic activity. Disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities,
resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable
economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment
originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments. In addition, due to the outbreak in the United States, certain personnel of our Investment Adviser are currently working remotely, which may introduce
additional operational risk to us. Staff members of certain of our other  66




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service providers may also work remotely during the COVID-19 outbreak. An extended period of remote working could lead to service limitations or
failures that could impact us or our performance. Further, current market conditions resulting from
the COVID-19 pandemic may make it difficult for us to obtain debt capital on favorable terms and any failure to do so could have a material adverse effect on our business. The debt capital that will
be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we would otherwise expect, including being at a higher cost in rising rate environments. If we are unable to raise debt, then
our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make or fund commitments to portfolio companies. An inability to obtain indebtedness could have a
material adverse effect on our business, financial condition or results of operations. The continued uncertainty related to the sustainability and
pace of economic recovery in the U.S. and globally could have a negative impact on our business. Our business is directly influenced by the
economic cycle, and could be negatively impacted by a downturn in economic activity in the U.S. as well as globally. Fiscal and monetary actions taken by U.S. and non-U.S. government and regulatory authorities could have a material adverse impact on
our business. To the extent uncertainty regarding the U.S. or global economy, including as a result of the global COVID-19 pandemic, negatively impacts consumer confidence and consumer credit
factors, our business, financial condition and results of operations could be adversely affected. Moreover, Federal Reserve policy, including with respect to certain interest rates and the decision to end its quantitative easing policy, along with
the general policies of the current Presidential administration, may also adversely affect the value, volatility and liquidity of dividend- and interest-paying securities. Market volatility, rising interest rates and/or a return to unfavorable
economic conditions could adversely affect our business. There is uncertainty surrounding potential legal, regulatory and policy changes by new
presidential administrations in the United States that may directly affect financial institutions and the global economy. As a result of the
November 2020 elections in the United States, the Democratic Party gained control of both the Presidency and the Senate from the Republican Party. Therefore, changes in federal policy, including tax policies, and at regulatory agencies are expected
to occur over time through policy and personnel changes, which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and
political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain. Uncertainty surrounding future changes may adversely affect our operating environment and therefore our
business, financial condition, results of operations and growth prospects. We are exposed to risks associated with changes in interest rates,
including the transition away from LIBOR and the adoption of alternative reference rates. LIBOR, the London Interbank Offered Rate, is the basic
rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in term loans we extend to portfolio
companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR. Per an announcement by the United Kingdoms Financial Conduct Authority (the FCA), which regulates LIBOR, on March 5, 2021: (i) 24 LIBOR
settings ceased to exist after December 31, 2021 (all seven euro LIBOR settings; all seven Swiss franc LIBOR settings; the Spot
Next, 1-week, 2-month, and 12-month Japanese yen LIBOR settings; the overnight, 1-week, 2-month, and 12-month sterling LIBOR settings; and the 1-week and 2-month US
dollar LIBOR settings); (ii) the overnight and 12-month US LIBOR settings would cease to exist after June 30, 2023; and (iii) the FCA would consult on whether the remaining nine LIBOR
settings should  67




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continue to be published on a synthetic basis for a certain period using the FCAs proposed new powers that the UK government is legislating to grant to them. Central banks and regulators in
a number of major jurisdictions (for example, United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates. To identify
a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (ARRC), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured
Overnight Financing Rate (SOFR) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed
repurchase transactions. On July 29, 2021, the ARCC formally recommended SOFR as its preferred alternative replacement rate for U.S. dollar LIBOR. At this time, it is not possible to predict the effect of any such changes, any establishment of
alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 pandemic will have further effect on LIBOR
transition plans. Given the inherent differences between LIBOR and SOFR, or any other alternative reference rates that may be established, the transition
from LIBOR may disrupt the overall financial markets and adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities, or the cost of our borrowings. In addition, changes or reforms
to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities, including the value and/or transferability of the
LIBOR-indexed, floating-rate debt securities in our portfolio, or the cost of our borrowings. Additionally, if as currently expected LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond June 30, 2023, with
our credit facility lenders and our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with SOFR or other alternative reference rates, The transition from LIBOR to SOFR or other alternative reference
rates may also introduce operational risks in our accounting, financial reporting, loan servicing, liability management and other aspects of our business. We are assessing the impact of a transition from LIBOR; however, we cannot reasonably estimate
the impact of the transition at this time. Inflation may adversely affect the business, results of operations and financial condition of our
portfolio companies. Certain of our portfolio companies are in industries that may be impacted by inflation. If such portfolio companies are
unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on our loans, particularly if interest rates rise in
response to inflation. In addition, any projected future decreases in our portfolio companies operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments
could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations. Technological innovations and
industry disruptions may negatively impact us. Technological innovations have disrupted traditional approaches in multiple industries and can
permit younger companies to achieve success and in the process disrupt markets and market practices. We can provide no assurance that new businesses and approaches will not be created that would compete with us and/or our portfolio companies or
alter the market practices in which SLR Capital Partners and its affiliates and us have been designed to function within and on which we depend on for our investment return. New approaches could damage our investments, disrupt the market in which we
operate and subject us to increased competition, which could materially and adversely affect our business, financial condition and results of investments. We are subject to risks related to corporate social responsibility. Our business (including that of our portfolio companies) faces increasing public scrutiny related to environmental, social and governance (ESG)
activities. We risk damage to our brand and reputation if we fail  68




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to act responsibly in a number of areas, such as diversity, equity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering
ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the value of our brand, our relationship with existing and future portfolio companies, the cost of our operations and relationships with
investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG that are
applicable to us and our portfolio companies could adversely affect our business. In May 2018, the European Commission adopted an action plan on financing sustainable growth. The action plan is, among other things, designed to define and
reorient investment toward sustainability. The action plan contemplates: establishing EU labels for green financial products; increasing disclosure requirements in the financial services sector around ESG and strengthening the transparency of
companies on their ESG policies and introducing a green supporting factor in the EU prudential rules for banks and insurance companies to incorporate climate risks into banks and insurance companies risk management policies.
There is a risk that a significant reorientation in the market following the implementation of these and further measures could be adverse to our portfolio companies if they are perceived to be less valuable as a consequence of, e.g., their carbon
footprint or greenwashing (i.e., the holding out of a product as having green or sustainable characteristics where this is not, in fact, the case). We and our portfolio companies are subject to the risk that similar measures might be
introduced in other jurisdictions in the future. Additionally, compliance with any new laws or regulations increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio
companies conduct our businesses and adversely affect our profitability. The effect of global climate change may impact the operations of our
portfolio companies. There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio
companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy
use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to
their business. A decrease in energy use due to weather changes may affect some of our portfolio companies financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and
can contribute to increased system stresses, including service interruptions. Energy companies could also be affected by the potential for lawsuits against or taxes or other regulatory costs imposed on greenhouse gas emitters, based on links drawn
between greenhouse gas emissions and climate change. In December 2015 the United Nations, of which the U.S. is a member, adopted a climate accord (the
Paris Agreement) with the long-term goal of limiting global warming and the short-term goal of significantly reducing greenhouse gas emissions. As a result, some of our portfolio companies may become subject to new or
strengthened regulations or legislation, which could increase their operating costs and/or decrease their revenues. We cannot predict how new tax
legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business. Legislative or
other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.
Treasury Department. The Biden Administration has proposed significant changes to the existing U.S. tax rules, and there are a number of proposals in Congress that would similarly modify the existing U.S. tax rules. The likelihood of any such
legislation being enacted is uncertain, but new legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax
treatment as a RIC or the U.S.  69




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federal income tax consequences to us and our investors of such qualification, or could have other adverse consequences. Investors are urged to consult with their tax advisor regarding tax
legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our common stock. Uncertainty
about U.S. government initiatives could negatively impact our business, financial condition and results of operations. The U.S. government has
recently called for significant changes to U.S. trade, healthcare, immigration, foreign and government regulatory policy. In this regard, there is significant uncertainty with respect to legislation, regulation and government policy at the federal
level, as well as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new
and difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications. There
has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy. To the extent the U.S. Congress or the current administration implements
changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. A particular area identified as subject to potential change, amendment or repeal includes the Dodd-Frank Wall Street Reform and Consumer Protection Act,
or the Dodd-Frank Act, including the Volcker Rule and various swaps and derivatives regulations, credit risk retention requirements and the authorities of the Federal Reserve, the Financial Stability Oversight Council and the SEC. Given
the uncertainty associated with the manner in which and whether the provisions of the Dodd-Frank Act will be implemented, repealed, amended, or replaced, the full impact such requirements will have on our business, results of operations or financial
condition is unclear. The changes resulting from the Dodd-Frank Act or any changes to the regulations already implemented thereunder may require us to invest significant management attention and resources to evaluate and make necessary changes in
order to comply with new statutory and regulatory requirements. Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact our business, results of operations or financial condition. While we cannot
predict what effect any changes in the laws or regulations or their interpretations would have on us as a result of recent financial reform legislation, these changes could be materially adverse to us and our stockholders.  Item 1B.
Unresolved Staff Comments None.  Item 2.
Properties Our executive offices are located at 500 Park Avenue, New York, New York 10022, and are provided by SLR Capital Management in accordance with the terms of the
Administration Agreement. We believe that our office facilities are suitable and adequate for our business as it is presently conducted.  Item 3.
Legal Proceedings On January 31, 2022, two putative class action stockholder complaints were filed in the Circuit Court for Baltimore City, Maryland against us and the
members of the Board, captioned respectively Neal v. Gross, et al., No. 24-C-22-000557 (Md. Cir. Ct. Baltimore City) (the
Neal Complaint), and Tobin v. Gross, et al., 24-C-22-000558 (Md. Cir. Ct. Baltimore City) (the Tobin
Complaint). On February 8, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against us and the members of the Board, entitled Kershner v. SLR Senior Investment Corp., et
al., No. 1:22-cv-01096 (the Kershner Complaint). On February 21, 2022, a stockholder complaint was filed in the United States District Court for the
Southern District of New York, against us and the members of the Board, entitled Sharp v. SLR  70




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Senior Investment Corp., et al., No. 1:22-cv-01418 (the Sharp Complaint). On
February 22, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against us, the members of the Board, SLR Investment Corp.(SLRC), and SLR Capital Partners, LLC
(SCP) entitled Ciccotelli v. SLR Senior Investment Corp., et al., No. 1:22-cv-01454 (the Ciccotelli Complaint). On February 22, 2022, a
stockholder complaint was filed in the United States District Court for the Eastern District of Pennsylvania, against us and the members of the Board entitled Justice v. SLR Senior Investment Corp., et al., No. 2:22-cv-00673 (the Justice Complaint and together with the Neal Complaint, Tobin Complaint, Kershner Complaint, Sharp Complaint, and Ciccotelli Complaint, the Merger Complaints). Each of the Neal Complaint and Tobin Complaint alleges, among other things, that the members of the Board breached their fiduciary duties when they approved
the proposed merger between us and SLRC, and that the disclosures in the joint proxy statement/prospectus relating to the Mergers contains materially misleading and incomplete disclosures. Each of the Neal Complaint and Tobin Complaint raises these
claims under Maryland law, and seeks: (i) certification that the case can be maintained as a class action, with the plaintiff named as a representative of the proposed class (consisting of the public shareholders of us); (ii) an order enjoining
the shareholder vote to approve the proposed merger between us and SLRC; and (iii) rescission of the proposed merger between us and SLRC. Each of
the Kershner Complaint, Sharp Complaint, Ciccotelli Complaint, and Justice Complaint alleges, among other things, that the joint proxy statement/prospectus filed with the SEC on February 3, 2022 contains materially misleading and incomplete
disclosures. Each of these Complaints seeks, among other things, that supplemental disclosures be made to the joint proxy statement/prospectus to address the alleged materially misleading and incomplete disclosures. As a result of the alleged
omissions, each of these Complaints seeks to hold us and our directors liable for violating Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and additionally seeks to hold our
directors, and in the case of the Ciccotelli Complaint SLRC and SCP, liable as control persons pursuant to Section 20(a) of the Exchange Act. We and
the members of the Board (the individual defendants) believe that we have disclosed in the joint proxy statement/prospectus all information required to be disclosed therein and that the additional disclosures requested by the plaintiffs
are immaterial. Neither we nor the individual defendants have yet responded to the Merger Complaints. Each of the Merger Complaints seeks, among other relief, an injunction preventing the closing of the Mergers, rescission of the Merger Agreement or
any of its terms to the extent already implemented or awarding of rescissory damages, and expenses incurred by prosecuting the Merger Complaints, including an award of attorneys and experts fees. While we and the individual defendants believe these claims are without merit and intend to defend the lawsuits vigorously, there can be no assurance that we
and the individual defendants will ultimately prevail in any of the Merger Complaints. Additionally, further lawsuits may be filed before our special meeting to vote on the approval of the Mergers and/or the consummation of the Mergers. While
the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.  Item 4.
Mine Safety Disclosures Not applicable.  71




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PART II  Item 5.
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol SUNS. The following table sets forth, for each
fiscal quarter during the last two fiscal years, the net asset value (NAV) per share of our common stock, the high and low closing sale prices for our common stock, such sale prices as a percentage of NAV per share and quarterly
distributions per share.  Price Range


Premium or(Discount) of HighClosing Sale Priceto NAV(2)


Premium or(Discount) ofLow ClosingSale Price toNAV(2)


DeclaredDistributions (3)NAV(1)


High


LowFiscal 2021Fourth Quarter

$
15.43


$
16.11


$
13.65



4.4
%


(11.5
)%

$
0.30Third Quarter


15.73



16.16



15.26



2.7



(3.0
)


0.30Second Quarter


15.87



16.30



14.74



2.7



(7.1
)


0.30First Quarter


15.91



15.65



14.14



(1.6
)


(11.1
)


0.30Fiscal 2020Fourth Quarter

$
15.91


$
14.98


$
12.30



(5.8
)%


(22.7
)%

$
0.30Third Quarter


15.79



13.78



12.03



(12.7
)


(23.8
)


0.30Second Quarter


15.55



13.86



9.48



(10.9
)


(39.0
)


0.3175First Quarter


14.59



18.29



6.95



25.4



(52.4
)


0.3525  (1)
Net asset value per share is determined as of the last day in the relevant quarter and therefore may not
reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period. (2)
Calculated as the respective high or low closing sales price divided by NAV and subtracting 1. (3)
Represents the cash distribution declared for the specified quarter. On February 25, 2022 the last reported sales price of our common stock was $13.63 per share. As of February 25, 2022, we had 4
shareholders of record. Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those
shares. The possibility that our shares of common stock will trade at a discount from net asset value or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value will decrease. Since our
IPO on February 24, 2011, our shares of common stock have traded at both a discount and a premium to the net assets attributable to those shares. As of February 25, 2022, our shares of common stock traded at a discount equal to
approximately 13.2% of the net assets attributable to those shares based upon our net asset value as of December 31, 2021. It is not possible to predict whether the shares offered hereby will trade at, above, or below net asset value. DISTRIBUTIONS Tax characteristics of all
distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Future monthly distributions, if any, will be determined by the Companys board of directors (the Board). We expect that our
distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable. We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our
ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we  72




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currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally
available for such distributions, we may in the future decide to retain such capital gains for investment. We maintain an opt
out dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders cash distributions will be automatically reinvested in additional shares of our common stock, unless they
specifically opt out of the dividend reinvestment plan so as to receive cash distributions. We may not be able to achieve
operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a business development company, we may
in the future be limited in our ability to make distributions. Also, our revolving credit facility may limit our ability to declare distributions if we default under certain provisions. If we do not distribute a certain percentage of our income
annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a regulated investment company. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we
have not yet received in cash, such as contractual payment-in-kind income, which represents contractual income added to the loan balance that becomes due at the end of
the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment
company taxable income to obtain tax benefits as a regulated investment company. With respect to the distributions to stockholders,
income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders. We cannot assure stockholders that they will receive any distributions at a particular level. All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically
reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in shares of common stock may
experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of
our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.  73




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STOCK PERFORMANCE GRAPH This graph compares the cumulative total return on our common stock with that of the Standard & Poors BDC Index,
Standard & Poors 500 Stock Index and the Russell 2000 Financial Services Index, for the period from December 31, 2016 through December 31, 2021. The graph assumes that a person invested $10,000 in each of the following: our
common stock (SUNS), the S&P BDC Index, the S&P 500 Index, and the Russell 2000 Financial Services Index. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that
dividends paid are invested in additional shares of the same class of equity securities at the frequency with which dividends are paid of such securities during the applicable fiscal year.  LOGO The graph and other information furnished under this Part II Item 5 of this Form 10-K shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the 1934 Act. The stock price
performance included in the above graph is not necessarily indicative of future stock price performance. FEES AND EXPENSES The following table is intended to assist an investor in understanding the costs and expenses that you will bear directly or indirectly. We
caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this report contains a reference to fees or expenses paid by us or SLR
Senior, or that we will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in SLR Senior.  Stockholder transaction expenses:Sales load (as a percentage of offering price)



%(1)Offering expenses (as a percentage of offering price)



%(2)Dividend reinvestment plan expenses



%(3)Total stockholder transaction expenses (as a percentage of offering price)



%(2)  74




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Annual expenses (as a percentage of net assets attributable to common stock):(4)Base management fee


1.58
%(5)Incentive fees payable under our Investment Advisory and Management Agreement (up to 20%)




%(6)Interest payments on borrowed funds


2.80
%(7)Acquired fund fees and expenses



%Other expenses (estimated)


1.68
%(8)Total annual expenses


6.06
%  (1)
In the event that the shares of common stock are sold to or through underwriters, a corresponding prospectus
supplement will disclose the applicable sales load and the Example will be updated accordingly. (2)
The prospectus supplement corresponding to each offering will disclose the applicable offering expenses and
total stockholder transaction expenses. (3)
The expenses of the dividend reinvestment plan are included in other expenses. (4)
Annual Expenses are presented in this manner because common shareholders will bear all costs of running the
Company. (5)
Our 1% base management fee under the Investment Advisory and Management Agreement is based on our gross assets,
which is defined as all the assets of SLR Senior, excluding temporary assets, including those acquired using borrowings for investment purposes, and assumes the base management fee remains consistent with fees incurred for the fiscal year ended
December 31, 2021. (6)
Assumes that annual gross incentive fees, if any, earned by our investment adviser, SLR Capital Partners,
remain consistent with the incentive fees earned by SLR Capital Partners for the fiscal year ended December 31, 2021. The incentive fee consists of two parts: The first part, which is payable quarterly in arrears, equals 20% of the excess, if any, of our
Pre-Incentive Fee Net Investment Income that exceeds a 1.75% quarterly (7.00% annualized) hurdle rate, which we refer to as the Hurdle, subject to a
catch-up provision measured at the end of each calendar quarter. The first part of the incentive fee is computed and paid on income that may include interest that is accrued but not yet received in
cash. The operation of the first part of the incentive fee for each quarter is as follows:  

no incentive fee is payable to our investment adviser in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the Hurdle of 1.75%;  

50% of our Pre-Incentive Fee Net Investment Income with respect to that
portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle but is less than 2.9167% in any calendar quarter (11.67% annualized) is payable to our investment adviser. We refer to
this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle but is less than 2.9167%) as the catch-up. The catch-up is meant to provide our investment adviser with 20% of our Pre-Incentive Fee Net Investment Income, as if a Hurdle did not apply when our Pre-Incentive Fee Net Investment Income exceeds 2.9167% in any calendar quarter; and  

20% of the amount of our Pre-Incentive Fee Net Investment Income, if any,
that exceeds 2.9167% in any calendar quarter (11.67% annualized) is payable to our investment adviser (once the Hurdle is reached and the catch-up is achieved, 20% of all
Pre-Incentive Fee Investment Income thereafter is allocated to our investment adviser). The second part of the incentive fee equals 20% of our Incentive Fee Capital Gains, if any, which equals our realized capital gains
on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain
incentive fees. The second part of the incentive fee is payable, in arrears, at the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date).  75




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(7)
We currently borrow funds under our credit facilities and may borrow additional funds from time to time to make
investments to the extent we determine that the economic situation is conducive to doing so. The costs associated with our outstanding borrowings are indirectly born by our investors. For purposes of this section, we have computed interest expense
using the average consolidated balance outstanding for borrowings during the fiscal year ended December 31, 2021. We used the LIBOR or similar base rate on December 31, 2021 and the interest rate on our credit facilities on
December 31, 2021. We have also included, as applicable, the estimated amortization of fees incurred in establishing the credit facilities as of December 31, 2021. Additionally, we included the estimated cost of commitment fees for
unused balances on our credit facilities. As of December 31, 2021, we had $161.5 million outstanding and $148.5 million remaining available to us under our credit facilities. Although we do not have any current plans to issue
subscription rights, preferred stock, or warrants, we may issue subscription rights, preferred stock, or warrants, subject to our compliance with applicable requirements under the 1940 Act. (8)
Other expenses are based on estimated amounts for the current fiscal year, which considers the
amounts incurred for the fiscal year ended December 31, 2021 and include our overhead expenses, including payments under our Administration Agreement based on our allocable portion of overhead and other expenses incurred by SLR Capital
Management in performing its obligations under the Administration Agreement. Example The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual operating expenses would remain at the levels set forth in the table above and have excluded performance-based
incentive fees. As such, the below example is based on an annual expense ratio of 6.06% See Note 7 above for additional information regarding certain assumptions regarding our level of leverage. In the event that shares are sold to or through
underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.  1 Year


3 Years


5 Years


10 YearsYou would pay the following expenses on a $1,000 investment, assuming a 5% annual return

$
61


$
180


$
296


$
578 The example and the expenses in the tables above should not be considered a representation of our future
expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under
the Investment Advisory and Management Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes
that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization
of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher. For example, if we assumed that we received our 5% annual return completely in the form of net realized capital gains on
our investments, computed net of all cumulative unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:  1 Year


3 Years


5 Years


10 YearsYou would pay the following expenses on a $1,000 investment, assuming a 5% annual return

$
71


$
207


$
339


$
644 In addition, the example assumes no sales load. Also, while the example assumes reinvestment of all
distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the distribution payable to a participant by  76




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the market price per share of our common stock at the close of trading on the distribution payment date, which may be at, above or below net asset value unless the company makes open market
purchases and the shares received will be determined based on the average price paid by our agents, plus commissions.  Item 6.
Reserved  Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations The information contained in this section should be read in conjunction with the Selected Financial and Other
Data and our Consolidated Financial Statements and notes thereto appearing elsewhere in this report. Some of the statements in this
report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to:  

our future operating results, including our ability to achieve objectives as a result of the current COVID-19 pandemic;  

our business prospects and the prospects of our portfolio companies;  

the impact of investments that we expect to make;  

our contractual arrangements and relationships with third parties;  

the dependence of our future success on the general economy and its impact on the industries in which we invest
and the impact of the COVID-19 pandemic thereon;  

the impact of any protracted decline in the liquidity of credit markets on our business and the impact of the COVID-19 pandemic thereon;  

the ability of our portfolio companies to achieve their objectives, including as a result of the current COVID-19 pandemic;  

the valuation of our investments in portfolio companies, particularly those having no liquid trading market, and
the impact of the COVID-19 pandemic thereon;  

market conditions and our ability to access alternative debt markets and additional debt and equity capital, and
the impact of the COVID-19 pandemic thereon;  

our expected financings and investments;  

the adequacy of our cash resources and working capital;  

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19 pandemic thereon; and  

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our
investments and the impacts of the COVID-19 pandemic thereon.  

changes in the political conditions and relations between the United States, Russia, Ukraine and other nations. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors,
some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:  

an economic downturn, including as a result of the current COVID-19
pandemic, could impair our portfolio companies ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;  77




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

a contraction of available credit and/or an inability to access the equity markets, including as a result of the
current COVID-19 pandemic, could impair our lending and investment activities;  

interest rate volatility could adversely affect our results, particularly because we use leverage as part of our
investment strategy;  

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to
the extent that we receive payments denominated in foreign currency rather than U.S. dollars;  

the ability of the parties to consummate the Mergers on the expected timeline, or at all;  

the ability to realize the anticipated benefits of the Mergers;  

the effects of disruption on our business from the proposed Mergers;  

the combined companys plans, expectations, objectives and intentions as a result of the Mergers;  

any potential termination of the Merger Agreement;  

the actions of our stockholders or the stockholders of SLRC with respect to the proposals submitted for their
approval in connection with the Mergers; and  

the risks, uncertainties and other factors we identify in Item 1A.  Risk Factors contained in this Annual
Report on Form 10-K for the year ended December 31, 2021 and in our other filings with the SEC. We generally use words such as anticipates, believes, expects, intends and similar expressions
to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in Risk Factors and elsewhere in this report. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume
no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any
additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Overview SLR Senior Investment Corp. (SLR Senior, the Company, we or our), a Maryland corporation formed
in December 2010, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company
(BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) Topic 946. In addition, for tax purposes, the Company has elected to be treated, and intend to qualify annually, as a regulated investment company (RIC) under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). On February 24, 2011, we priced our initial
public offering, selling 9.0 million shares, including the underwriters over-allotment, raising approximately $168 million in net proceeds. Concurrent with this offering, Solar Senior Capital Investors LLC, an entity controlled by
Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, purchased an
additional 500,000 shares through a concurrent private placement, raising another $10 million.  78




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We invest primarily in privately held U.S. middle-market companies, where we believe the
supply of primary capital is limited and the investment opportunities are most attractive. We define middle market to refer to companies with annual revenues between $50 million and $1 billion. Our investment objective is to
seek to maximize current income consistent with the preservation of capital. We seek to achieve our investment objective by directly and indirectly investing in senior loans, including first lien and second lien debt instruments, made to private
middle-market companies whose debt is rated below investment grade, which we refer to collectively as senior loans. We may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market
conditions, at least 80% of the value of our net assets (including the amount of any borrowings for investment purposes) will be invested directly and indirectly in senior loans. Senior loans typically pay interest at rates which are determined
periodically on the basis of a floating base lending rate, primarily LIBOR, plus a premium. Senior loans in which we invest are typically made to U.S. and, to a limited extent, non-U.S. corporations,
partnerships and other business entities which operate in various industries and geographical regions. Senior loans typically are rated below investment grade. Securities rated below investment grade are often referred to as leveraged
loans, high yield or junk securities, and may be considered high risk compared to debt instruments that are rated investment grade. In addition, some of our debt investments are not scheduled to fully
amortize over their stated terms, which could cause us to suffer losses if the respective issuer of such debt investment is unable to refinance or repay their remaining indebtedness at maturity. While the Company does not typically seek to invest in
traditional equity securities as part of its investment objective, the Company may occasionally acquire some equity securities in connection with senior loan investments and in certain other unique circumstances, such as the Companys equity
investments in SLR Healthcare ABL (SLR Healthcare) and SLR Business Credit. We invest in senior loans made primarily to
private, leveraged middle-market companies with approximately $20 million to $100 million of earnings before income taxes, depreciation and amortization (EBITDA). Our business model is focused primarily on the direct
origination of investments through portfolio companies or their financial sponsors. Our direct investments in individual securities will generally range between $5 million and $30 million each, although we expect that this investment size
will vary proportionately with the size of our capital base and/or strategic initiatives. In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary
focus but are intended to enhance our overall returns. These opportunistic investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select
countries outside of the United States. We may invest up to 30% of our total assets in such opportunistic investments, including loans issued by non-U.S. issuers, subject to compliance with our regulatory
obligations as a BDC under the 1940 Act. Our investment activities are managed by SLR Capital Partners, LLC (SLR Capital Partners or Investment Adviser) and supervised by the Board, a majority of whom are non-interested, as such term is defined in the 1940 Act. SLR Capital Management, LLC (SLR Capital Management or Administrator) provides the administrative services necessary for us to
operate. As of December 31, 2021, the Investment Adviser has directly invested approximately $12.5 billion in more than 450
different portfolio companies since 2006. Over the same period, the Investment Adviser completed transactions with over 200 different financial sponsors. Merger Agreement On December 1,
2021, we entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into us, with us continuing as the surviving company and as SLRCs wholly-owned
subsidiary and, immediately thereafter, we will merge with and into SLRC, with SLRC continuing as the surviving company. Both the Board and SLRCs board of directors, including all of the respective independent directors, in each case, on the
recommendation of a special committee comprised solely of the independent directors of us or SLRC, as applicable, have approved the Merger Agreement and the transactions contemplated thereby. At the effective time of the Merger (Effective Time), each share of our common stock issued and outstanding immediately prior to
the Effective Time (other than shares owned by SLRC or any of its controlled  79




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subsidiaries (the Cancelled Shares)) will be converted into the right to receive a number of shares of SLRCs common stock equal to the Exchange Ratio (as defined below) (cash
may be paid in lieu of fractional shares). As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior
to the Effective Time (such date, the Determination Date), each of us and SLRC will deliver to the other a calculation of its NAV as of such date, in each case using a pre-agreed set of
assumptions, methodologies and adjustments. We refer to such calculation with respect to us as the Closing SUNS Net Asset Value and with respect to SLRC as the Closing SLRC Net Asset Value. Based on such calculations, the
parties will calculate the SUNS Per Share NAV, which will be equal to (i) the Closing SUNS Net Asset Value divided by (ii) the number of shares of our common stock issued and outstanding as of the Determination Date (excluding
any Cancelled Shares), and the SLRC Per Share NAV, which will be equal to (A) the Closing SLRC Net Asset Value divided by (B) the number of shares of SLRC Common Stock issued and outstanding as of the Determination Date. The
Exchange Ratio will be equal to the quotient (rounded to four decimal places) of (i) the SUNS Per Share NAV divided by (ii) the SLRC Per Share NAV. We and SLRC will update and redeliver the Closing SUNS Net Asset Value or the Closing SLRC Net Asset Value, respectively, in the event of a
material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the Effective Time. The Merger Agreement contains customary representations and warranties by each of us, SLRC and SLR Capital Partners. The Merger Agreement also
contains customary covenants, including, among others, covenants relating to the operation of each of our and SLRCs businesses during the period prior to the closing of the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2022, is subject to certain
closing conditions, including requisite approvals of our and SLRCs stockholders and certain other closing conditions. The Merger
Agreement also contains certain termination rights in favor of us and SLRC, including if the Mergers are not completed on or before December 1, 2022 or if the requisite approvals of our or SLRCs stockholders are not obtained. The Merger
Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring us may be required to pay SLRC a termination fee of approximately $7.6 million. The Merger Agreement provides that, upon
the termination of the Merger Agreement under certain circumstances, a third party acquiring SLRC may be required to pay to us a termination fee of approximately $25.6 million. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is incorporated by reference as Exhibit 2.1 to this Annual Report on Form 10-K and incorporated by reference herein. The representations, warranties, covenants and
agreements contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates; were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger
Agreement); may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing
these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors and security holders should not rely on such representations, warranties,
covenants or agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties, covenants and agreements may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the
Merger Agreement.  80




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Recent Developments On January 5, 2022, the Board declared a monthly dividend of $0.10 per share payable on February 2, 2022 to holders of record as of
January 20, 2022. On February 3, 2022, the Board declared a monthly dividend of $0.10 per share payable on March 1, 2022
to holders of record as of February 17, 2022. On March 1, 2022, the Board declared a monthly dividend of $0.10 per share
payable on April 1, 2022 to holders of record as of March 18, 2022. The global outbreak of the
COVID-19 pandemic, and the related effect on the U.S. and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies and, as a
result, has had adverse effects on the Companys operations. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, including the Company, remain uncertain. The
operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and
liquidity of the Companys investments and negatively impact the Companys performance. Investments Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt
and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. As a BDC, we must not
acquire any assets other than qualifying assets specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include
investments in eligible portfolio companies. The definition of eligible portfolio company includes certain public companies that do not have any securities listed on a national securities exchange and companies whose
securities are listed on a national securities exchange but whose market capitalization is less than $250 million. Revenue We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment
securities that we may sell. Our debt investments generally have a stated term of three to seven years and typically bear interest at a floating rate usually determined on the basis of a benchmark London interbank offered rate (LIBOR),
commercial paper rate, or the prime rate. Interest on our debt investments is generally payable monthly or quarterly but may be bi-monthly or semi-annually. In addition, our investments may provide payment-in-kind (PIK) income. Such amounts of accrued PIK income are added to the cost of the investment on the respective capitalization dates and generally
become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable,
consulting fees, etc. Expenses All
investment professionals of the Investment Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable
to such services, are provided and paid for by SLR Capital Partners. We bear all other costs and expenses of our operations and transactions, including (without limitation):  

the cost of our organization and public offerings;  

the cost of calculating our net asset value, including the cost of any third-party valuation services;  

the cost of effecting sales and repurchases of our shares and other securities;  81




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

interest payable on debt, if any, to finance our investments;  

fees payable to third parties relating to, or associated with, making investments, including fees and expenses
associated with performing due diligence reviews of prospective investments and advisory fees;  

transfer agent and custodial fees;  

fees and expenses associated with marketing efforts;  

federal and state registration fees, any stock exchange listing fees;  

federal, state and local taxes;  

independent directors fees and expenses;  

brokerage commissions;  

fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;  

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;  

fees and expenses associated with independent audits and outside legal costs;  

costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and
state securities laws; and  

all other expenses incurred by either SLR Capital Management or us in connection with administering our business,
including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent,
the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs. We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in
dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and
costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among
other factors. Portfolio and Investment Activity During our fiscal year ended December 31, 2021, we invested approximately $192 million across 38 portfolio companies through a
combination of primary and secondary market purchases. This compares to investing approximately $71 million in 23 portfolio companies for the fiscal year ended December 31, 2020. Investments sold or prepaid during the fiscal year ended
December 31, 2021 totaled approximately $129 million versus approximately $186 million for the fiscal year ended December 31, 2020. At December 31, 2021, our portfolio consisted of 50 portfolio companies and was invested 71.2% directly in senior secured loans and 28.8%
in common equity/equity interests/warrants (of which 8.9% is SLR Healthcare ABL and 19.8% is SLR Business Credit, through which the Company indirectly invests in senior secured loans), in each case, measured at fair value versus 44 portfolio
companies invested 72.4% directly in senior secured loans and 27.6% in common equity/equity interests/warrants (of which 10.4% is SLR Healthcare ABL and 17.2% is SLR Business Credit) at December 31, 2020.  82




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At December 31, 2021, 96.5% or $388.7 million of our income producing investment
portfolio* was floating rate and 3.5% or $14.2 million was fixed rate, measured at fair value. At December 31, 2020, 96.0% or $327.2 million of our income producing investment portfolio* was floating rate and 4.0% or
$13.5 million was fixed rate, measured at fair value. Since the initial public offering of SLR Senior on February 24, 2011 and
through December 31, 2021, invested capital totaled over $1.9 billion in over 175 portfolio companies. Over the same period, SLR Senior completed transactions with more than 75 different financial sponsors.  *
We have included SLR Healthcare ABL and SLR Business Credit within our income producing investment portfolio. SLR Healthcare ABL We acquired an equity interest in Gemino Healthcare Finance LLC (Gemino) on September 30, 2013. Effective February 25,
2021, Gemino and its related companies is doing business as SLR Healthcare ABL. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. Our initial investment in SLR Healthcare was $32.8 million. The management team of SLR Healthcare co-invested in
the transaction and continues to lead SLR Healthcare. As of December 31, 2021, SLR Healthcares management team and SLR Senior own approximately 7% and 93% of the equity in SLR Healthcare, respectively. Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year,
non-recourse, $100.0 million credit facility with non-affiliates, which was expandable to $150.0 million under its accordion feature. Effective March 31,
2014, the credit facility was expanded to $105.0 million and again on June 27, 2014 to $110.0 million. On May 27, 2016, SLR Healthcare entered into a new $125.0 million credit facility which replaced the previously existing
facility. The new facility has similar terms as compared to the previous facility and includes an accordion feature increase to $200.0 million and had a maturity date of May 27, 2020. On June 28, 2019, this $125.0 million
facility was amended, extending the maturity date to June 28, 2023. SLR Healthcare currently manages a highly diverse portfolio of
directly-originated and underwritten senior-secured commitments. As of December 31, 2021, the portfolio totaled approximately $183.5 million of commitments with a total net investment in loans of $81.6 million on total assets of
$91.3 million. As of December 31, 2020, the portfolio totaled approximately $218.0 million of commitments with a total net investment in loans of $39.3 million on total assets of $58.9 million. At December 31,
2021, the portfolio consisted of 36 issuers with an average balance of approximately $2.3 million versus 37 issuers with an average balance of approximately $1.1 million at December 31, 2020. All of the commitments in SLR
Healthcares portfolio are floating-rate, senior-secured, cash-pay loans. SLR Healthcares credit facility, which is non-recourse to us, had approximately
$60.0 million and $25.0 million of borrowings outstanding at December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021 and 2020, SLR Healthcare had net income of $0.7 million and
$4.3 million, respectively, on gross income of $10.1 million and $10.4 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash
available for distributions. As such, and subject to fluctuations in SLR Healthcares funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Healthcare will be able to maintain
consistent dividend payments to us. SLR Healthcares consolidated financial statements for the fiscal years ended December 31, 2021 and December 31, 2020 are attached as an exhibit to this annual report on Form 10-K. SLR Business Credit We acquired 100% of the equity interests of North Mill Capital LLC (NMC) on October 20, 2017. NMC is a leading asset-backed
lending commercial finance company that provides senior secured asset-backed financings to U.S. based small-to-medium-sized
businesses primarily in the manufacturing, services and distribution industries.  83




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We invested approximately $51 million to effect the transaction. Subsequently, the Company contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, the
Company and ESP SSC Corporation contributed their equity interests to North Mill. On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. The Company and ESP SSC Corporation own 99% and 1% of the equity
interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco, LLC (NM Holdco), a newly formed entity and ESP SSC Corporation acquired 100% of Summit Financial Resources, a
Salt Lake City-based provider of asset-backed financing to small and medium-sized businesses. As part of this transaction, the Companys 99% interest in the equity of NMC was contributed to NM Holdco.
This approximately $15.5 million transaction was financed with borrowings on NMCs credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC
acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66.7 million was financed with equity from us of $19.0 million and borrowings on
NMCs credit facility of $47.7 million. SLR Business Credit currently manages a highly diverse portfolio of directly-originated
and underwritten senior-secured commitments. As of December 31, 2021, the portfolio totaled approximately $513.9 million of commitments, of which $248.7 million were funded, on total assets of $290.8 million. As of
December 31, 2020, the portfolio totaled approximately $387.2 million of commitments, of which $148.7 million were funded, on total assets of $177.7 million. At December 31, 2021, the portfolio consisted of 125 issuers
with an average balance of approximately $2.0 million versus 126 issuers with an average balance of approximately $1.2 million at December 31, 2020. NMC has a senior credit facility with a bank lending group for $225.0 million
which expires on November 13, 2024. Borrowings are secured by substantially all of NMCs assets. NMCs credit facility, which is non-recourse to us, had approximately
$183.3 million and $111.1 million of borrowings outstanding at December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021 and December 31, 2020, SLR Business Credit had net income of
$7.3 million and $4.5 million, respectively on gross income of $24.0 million and $19.7 million, respectively. Due to timing and non-cash items, there may be material differences between
GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Business Credits funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business
Credit will be able to maintain consistent dividend payments to us. SLR Business Credits consolidated financial statements for the fiscal years ended December 31, 2021 and 2020 are attached as an exhibit to this annual report on Form 10-K. Critical Accounting Policies The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could
materially differ from those estimates. We have identified the following items as critical accounting policies. Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other
reasonably likely events or circumstances that would result in materially different amounts being reported. Valuation of Portfolio Investments We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP,
and the 1940 Act. Our valuation procedures are set forth in more detail in Note 2(b) to the Companys Consolidated Financial Statements. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements
express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.  84




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Revenue Recognition The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis.
Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or
more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or
dividends are paid in cash, and in managements judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on investments may be recognized as income or
applied to principal depending upon managements judgment. Some of our investments may have contractual PIK income. PIK income is computed at the contractual rate, as applicable, and is accrued and reflected as a receivable up to the
capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and
interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at
the maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status.
When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively. The Company
does not reverse previously capitalized PIK income. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored
to accrual status if the Company again believes that PIK is expected to be realized. Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method. Upon the
prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring fees are recorded as other
income when earned. The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment
deferral and increased credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans. PIK securities may have unreliable valuations because their continuing accruals require
continuing judgments about the collectability of the deferred payments and the value of any associated collateral. PIK income has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In
addition, the deferral of PIK income also increases the loan-to-value ratio at a compounding rate. PIK securities create the risk that incentive fees will be paid to the
Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees. For the fiscal years ended
December 31, 2021, 2020 and 2019, capitalized PIK income totaled $0.2 million, $0.4 million and $0.7 million, respectively. Net
Realized Gain or Loss and Net Change in Unrealized Gain or Loss We generally measure realized gain or loss by the difference
between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and
prepayment penalties. The net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized.
Gains or losses on investments are calculated by using the specific identification method. Income Taxes SLR Senior, a U.S. corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. In order
to qualify for taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by  85




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the Code, for each year. Depending on the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year distributions into the next
tax year and pay a nondeductible 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the
Company accrues an estimated excise tax, if any, on estimated excess taxable income. Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other
transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as
of March 12, 2020 through December 31, 2022. The Company is evaluating the potential impact that the adoption of this guidance will have on the Companys financial statements. RESULTS OF OPERATIONS Results
comparisons are for the fiscal years ended December 31, 2021 and December 31, 2020. Results for the fiscal year ended December 31, 2019 can be found in Item 7 of the Companys report on Form
10-K filed on February 24, 2021, which is incorporated by reference herein. Investment Income For the fiscal years ended December 31, 2021 and 2020, gross investment income totaled $29.3 million and $31.8 million,
respectively. The decrease in gross investment income year over year was primarily due to a slightly lower average portfolio yield on a smaller, on average, income producing investment portfolio. Expenses Net expenses totaled
$15.0 million and $11.4 million, respectively, for the fiscal years ended December 31, 2021 and 2020, of which $3.9 million and $4.2 million, respectively, were gross base management fees and gross performance-based
incentive fees, and $6.9 million and $7.9 million, respectively, were interest and other credit facility expenses. Over the same periods, $0 and $3.7 million of base management fees were waived and $0 and $0.1 million of
performance-based incentive fees were waived. Administrative services and other general and administrative expenses totaled $4.2 million and $3.1 million, respectively, for the fiscal years ended December 31, 2021 and 2020. Expenses
generally consist of management fees, performance-based incentive fees, administrative services expenses, insurance, legal expenses, directors expenses, audit and tax expenses, transfer agent fees and expenses, and other general and
administrative expenses. Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others. The increase in net expenses year over year is primarily due to higher
management fees from a decrease in the waivers of fees as well as higher general and administrative expenses resulting from $0.7 million of expenses related to the potential merger with SLR Investment Corp. Net Investment Income The Companys
net investment income totaled $14.3 million or $0.89 per average share and $20.4 million or $1.27 per average share, for the fiscal years ended December 31, 2021 and 2020, respectively. Net Realized Gain (Loss) The Company had
investment sales and prepayments totaling approximately $129 million and $186 million, respectively, for the fiscal years ended December 31, 2021 and 2020. Net realized gain (loss) for the fiscal years ended December 31, 2021 and
2020 totaled ($0.1) million and $0.2 million, respectively. Net realized losses for  86




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the fiscal year ended December 31, 2021 were primarily related to the sale of select assets. Net realized gains for the fiscal year ended December 31, 2020 were primarily related to the
sale of select assets. Net Change in Unrealized Loss For the fiscal years ended December 31, 2021 and 2020, the net change in unrealized loss on the Companys investments totaled
$2.7 million and $6.7 million, respectively. Net unrealized loss for the fiscal year ended December 31, 2021 is primarily due to depreciation on our investments in American Teleconferencing Services, Ltd., PPT Management Holdings,
LLC, and Logix Holding Company, LLC, among others, partially offset by appreciation on our investments in SLR Business Credit, Composite Technology Acquisition Corp. and SLR Healthcare ABL, among others. Net unrealized loss for the fiscal year ended
December 31, 2020 is primarily due to depreciation on our investments in North Mill Holdco LLC, Gemino Healthcare Finance, LLC, Composite Technology Acquisition Corp., SHO Holdings I Corporation and DISA Holdings Acquisition Subsidiary Corp.,
among others, partially offset by appreciation on our investments in Aegis Toxicology Sciences Corporation, Confie Seguros Holding II Co. and Galway Partners Holdings, LLC, among others. Net Increase in Net Assets From Operations For the fiscal years ended December 31, 2021 and 2020, the Company had a net increase in net assets resulting from operations of
$11.5 million and $13.9 million, respectively. For the fiscal years ended December 31, 2021 and 2020, earnings per average share were $0.72 and $0.87, respectively. LIQUIDITY AND CAPITAL RESOURCES The
Companys liquidity and capital resources are generally available through its revolving credit facilities, unsecured notes and through periodic follow-on equity offerings, as well as from cash flows from
operations, investment sales and pre-payments of investments. At December 31, 2021, the Company had $161.5 million in borrowings outstanding on its credit facilities and $148.5 million of unused
capacity, subject to borrowing base limits. On March 31, 2020, the Company closed a private offering of $85,000 of senior unsecured
notes due 2025 (the 2025 Unsecured Notes) with a fixed interest rate of 3.90% and a maturity date of March 31, 2025. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. The 2025 Unsecured
Notes were issued in a private placement only to qualified institutional buyers. On June 1, 2018, the $200 million senior
secured revolving credit facility with our wholly-owned subsidiary SUNS SPV LLC as borrower and Citibank, N.A. acting as administrative agent (the Credit Facility) was refinanced by way of amendment, allowing for greater investment
flexibility and the extension of the maturity date, among other changes. On July 13, 2018, commitments to the Credit Facility, as amended, were increased from $200 million to $225 million by utilizing the accordion feature. In September 2016, the Company closed a follow-on public equity offering of 4.5 million shares of
common stock at $16.76 per share raising approximately $75.0 million in net proceeds. In the future, if the merger with SLR Investment Corp. does not close, the Company may raise additional equity or debt capital, among other considerations.
The primary uses of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes. The issuance of debt or equity securities will depend on future market conditions, funding needs and other
factors and there can be no assurance that any such issuance will occur or be successful. Cash Equivalents We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. The Company
makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act. From time to time, including at or  87




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near the end of each fiscal quarter, we consider using various temporary investment strategies for our business. One strategy includes taking proactive steps by utilizing cash equivalents as
temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act. More specifically, from time-to-time we may
purchase U.S. Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to quarter end. We may also utilize repurchase agreements or other
balance sheet transactions, including drawing down on our credit facilities, as deemed appropriate. The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon
which the management fee is determined. We held approximately $160 million of cash equivalents as of December 31, 2021. Debt Unsecured Notes On
March 31, 2020, the Company closed a private offering of $85 million of the 2025 Unsecured Notes with a fixed interest rate of 3.90% and a maturity date of March 31, 2025. Interest on the 2025 Unsecured Notes is due semi-annually on
March 31 and September 30. The 2025 Unsecured Notes were issued in a private placement only to qualified institutional buyers. Revolving Loan Facilities On August 26, 2011, the Company established our wholly-owned subsidiary, SUNS SPV LLC (the SUNS SPV) which entered into the
Credit Facility with Citigroup Global Markets Inc. acting as administrative agent. On January 10, 2017, commitments to the Credit Facility, as amended, were increased from $175 million to $200 million by utilizing the accordion
feature. The commitment can also be expanded up to $600 million. The stated interest rate on the Credit Facility is LIBOR plus 2.00% with no LIBOR floor requirement and the current final maturity date is June 1, 2026. The Credit Facility
is secured by all of the assets held by SUNS SPV. Under the terms of the Credit Facility, SLR Senior and SUNS SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants,
including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The Credit Facility also includes usual and customary events of default for credit facilities of this nature. The Credit Facility
was amended on November 7, 2012, June 30, 2014 and May 29, 2015 to extend maturities and add greater investment flexibility, among other changes. On June 1, 2018, the Credit Facility was refinanced by way of amendment, allowing
for greater investment flexibility and the extension of the maturity date, among other changes. On July 13, 2018, commitments to the Credit Facility, as amended, were increased from $200 million to $225 million by utilizing the
accordion feature. On June 7, 2021, the Credit Facility maturity date was extended to June 1, 2026 and was amended to add greater investment flexibility, among other changes. As of December 31, 2021, there were $76.5 million of
borrowings outstanding under the Credit Facility. On May 31, 2019, the Company as transferor and FLLP
2015-1, LLC, a wholly-owned subsidiary of the Company, as borrower entered into amendment number five to the $75 million FLLP Facility with Wells Fargo Bank, NA acting as administrative agent. The Company
acts as servicer under the FLLP Facility. The FLLP Facility is scheduled to mature on May 31, 2024. The FLLP Facility generally bears interest at a rate of LIBOR plus a range of 2.15-2.25%. The Company
and FLLP 2015-1, LLC, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements and
other customary requirements for similar credit facilities. The FLLP Facility also includes usual and customary events of default for credit facilities of this nature. On May 11, 2021, the maximum facility amount was reduced from
$75.0 million to $11.3 million and the reinvestment period was terminated. On September 30, 2021, the FLLP Facility was repaid and terminated. At December 31, 2021, the Company was in compliance with all financial and operational covenants required by its credit facilities.  88




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Contractual Obligations  Payments due by Period as of December 31, 2021(dollars in millions)Total


Less than1 year


1-3 years


3-5 years


More than5 yearsRevolving credit facilities (1)

$
76.5


$



$



$
76.5


$
Unsecured senior notes


85.0











85.0



  (1)
At December 31, 2021, we had a total of $148.5 million of unused borrowing capacity under our
revolving credit facilities, subject to borrowing base limits. Under the provisions of the 1940 Act, we are permitted,
as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of
senior securities. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of
our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities,
we would also be exposed to typical risks associated with leverage, including an increased risk of loss. We have also entered into two
contracts under which we have future commitments: the Advisory Agreement, pursuant to which SLR Capital Partners has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which SLR Capital Management has agreed to
furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those
portfolio companies to which we are required to provide such assistance. Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a
two-part incentive fee. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of the Administrators overhead in performing its obligations under the
Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial officer and chief compliance officer and their respective staffs. Either party may terminate each of the
Advisory Agreement and Administration Agreement without penalty upon 60 days written notice to the other. See note 3 to our Consolidated Financial Statements. Senior Securities Information about our senior securities is shown in the following table as of the year ended December 31, 2021 and each year ended
December 31 since the Company commenced operations, unless otherwise noted. The  indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.  Class and Year

Total AmountOutstanding(1)


AssetCoveragePer Unit(2)


InvoluntaryLiquidatingPreferencePer Unit(3)


AverageMarket ValuePer Unit(4)Credit FacilityFiscal 2021

$
76,500


$
1,200


$




N/AFiscal 2020














N/AFiscal 2019


157,600



1,671







N/AFiscal 2018


119,200



1,770







N/AFiscal 2017


124,200



3,175







N/AFiscal 2016


98,300



3,738







N/AFiscal 2015


116,200



2,621







N/AFiscal 2014


143,200



2,421







N/AFiscal 2013


61,400



4,388







N/AFiscal 2012


39,100



5,453







N/AFiscal 2011


8,600



21,051







N/A  89




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##### Table of Contents

Class and Year

Total AmountOutstanding(1)


AssetCoveragePer Unit(2)


InvoluntaryLiquidatingPreferencePer Unit(3)


AverageMarket ValuePer Unit(4)FLLP FacilityFiscal 2021














N/AFiscal 2020


5,403



229







N/AFiscal 2019


53,602



569







N/AFiscal 2018


51,371



762







N/A2025 Unsecured NotesFiscal 2021


85,000



1,334







N/AFiscal 2020


85,000



3,596







N/ATotal Senior SecuritiesFiscal 2021

$
161,500


$
2,534


$




N/AFiscal 2020


90,403



3,825







N/AFiscal 2019


211,202



2,240







N/AFiscal 2018


170,571



2,532







N/AFiscal 2017


124,200



3,175







N/AFiscal 2016


98,300



3,738







N/AFiscal 2015


116,200



2,621







N/AFiscal 2014


143,200



2,421







N/AFiscal 2013


61,400



4,388







N/AFiscal 2012


39,100



5,453







N/AFiscal 2011


8,600



21,051







N/A  (1)
Total amount of each class of senior securities outstanding (in thousands) at the end of the period presented. (2)
The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our
consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the Asset Coverage
Per Unit. In order to determine the specific Asset Coverage Per Unit for each class of debt, the total Asset Coverage Per Unit was divided based on the amount outstanding at the end of the period for each. As of December 31, 2021, asset
coverage was 253.4%. (3)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the
issuer in preference to any security junior to it. (4)
Not applicable, we do not have senior securities that are registered for public trading.  90




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The following is a schedule of financial highlights for the respective years:  Year endedDecember 31, 2016


Year endedDecember 31, 2015


Year endedDecember 31, 2014


Year endedDecember 31, 2013


Year endedDecember 31, 2012Per Share Data: (a)Net asset value, beginning of year

$
16.33


$
17.65


$
18.04


$
18.33


$
18.15Net investment income


1.42



1.33



1.20



1.17



1.31Net realized and unrealized gain (loss)


0.50



(1.24
)


(0.18
)


(0.07
)


0.15Net increase in net assets resulting from operations


1.92



0.09



1.02



1.10



1.46Distributions to stockholders (see note 9a):From net investment income


(1.42
)


(1.41
)


(1.29
)


(1.20
)


(1.24
)From net realized gains


















(0.05
)From return of capital










(0.12
)


(0.22
)


Anti-dilution














0.05



Offering costs and other


(0.03
)










(0.02
)


0.01Net asset value, end of year

$
16.80


$
16.33


$
17.65


$
18.04


$
18.33Per share market value, end of year

$
16.44


$
14.90


$
14.97


$
18.22


$
18.66Total Return(b)


20.70
%


8.90
%


(10.47
%)


5.39
%


27.65
%Net assets, end of year

$
269,145


$
188,304


$
203,519


$
208,017


$
174,103Shares outstanding, end of year


16,025,011



11,533,315



11,533,315



11,529,303



9,500,100Ratios to average net assets:Net investment income


8.68
%


7.63
%


6.69
%


6.46
%


7.14
%Operating expenses


2.65
%*


2.92
%*


2.50
%*


2.46
%


3.20
%Interest and other credit facility expenses**


1.56
%


2.08
%


1.52
%


0.62
%


1.40
%Total expenses


4.21
%*


5.00
%*


4.02
%*


3.08
%


4.60
%Average debt outstanding

$
109,938


$
136,900


$
72,132


$
41,261


$
41,439Portfolio turnover ratio


38.4
%


34.0
%


47.5
%


56.8
%


74.5
%  (a)
Calculated using the average shares outstanding method. (b)
Total return is based on the change in market price per share during the year and takes into account any
distributions, if any, reinvested in accordance with the dividend reinvestment plan. Total return does not include a sales load. *
The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is
shown net of a voluntary incentive fee waiver (see note 3). For the year ended December 31, 2016, the ratios of
operating expenses to average net assets and total expenses to average net assets would be 3.60% and 5.15%, respectively, without the voluntary management and incentive fee waivers. For the year ended December 31, 2015, the ratios of operating
expenses to average net assets and total expenses to average net assets would be 3.29% and 5.37%, respectively, without the voluntary management and incentive fee waivers. For the year ended December 31, 2014, the ratios of operating expenses
to average net assets and total expenses to average net assets would be 2.61% and 4.13%, respectively, without the voluntary management and incentive fee waivers. **
Ratios shown without the non-recurring costs associated with the
amendments of the Credit Facility would be 1.56%, 1.67%, 1.05%, 0.62% and 0.85%, respectively, for the years ended December 31, 2016, 2015, 2014, 2013 and 2012.  91




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Off-Balance Sheet Arrangements From time-to-time and in the normal course of business, the
Company may make unfunded capital commitments to current or prospective portfolio companies. Typically, the Company may agree to provide delayed-draw term loans or, to a lesser extent, revolving loan or equity commitments. These unfunded capital
commitments always take into account the Companys liquidity and cash available for investment, prudent portfolio management of issuer diversification, and other considerations. Accordingly, the Company had the following unfunded capital
commitments at December 31, 2021 and December 31, 2020, respectively:  December 31, 2021


December 31, 2020(in millions)Arcutis Biotherpeutics, Inc

$
6.7


$
CC SAG Holdings Corp. (Spectrum Automotive)


6.2



NAC Holdings Corp


5.1



Glooko, Inc


4.7



Vessco Midco Holdings, LLC


4.6



BridgeBio Pharma, Inc


4.0



Plastics Management, LLC


3.5



Tilley Chemical Buyer, Inc


2.3



Maurices, Inc


2.2



Ivy Fertility Services, LLC


1.5



Drilling Info Holdings, Inc.


1.4



1.0SLR Healthcare ABL*


1.4



1.4RQM+ Corp


1.3



Composite Technology Acquisition Corp.


1.3



1.3RxSense Holdings LLC.


1.3



1.2Erie Construction Mid-west, LLC


1.2



TAUC Management, LLC


1.2



GSM Acquisition Corp


0.9



High Street Buyer, Inc


0.8



SOC Telemed, Inc


0.7



Foundation Consumer Brands, LLC


0.7



BayMark Health Services, Inc


0.7



Pinnacle Treatment Centers, Inc.


0.4



0.4Ultimate Baked Goods Midco, LLC


0.3



Neuronetics, Inc.


0.3



1.0SunMed Group Holdings, LLC


0.3



World Insurance Associates, LLC.


0.3



1.1American Teleconferencing Services, Ltd


0.3



All State Ag Parts, LLC


0.3



ENS Holdings III Corp. & ES Opco USA LLC


0.2



0.6Smile Doctors LLC






8.7RSC Acquisition, Inc






3.0Higginbotham Insurance Agency, Inc.






1.4Worldwide Facilities, LLC.






1.3Kindred Biosciences, Inc






1.1Trinity Partners, LLC.






0.7Sentry Data Systems, Inc.






0.5AQA Acquisition Holding, Inc.






0.1Total Commitments

$
56.1


$
24.8  *
The Company controls the funding of the SLR Healthcare ABL commitment and may cancel it at its discretion.  92




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##### Table of Contents

The credit agreements of the above loan commitments contain customary lending provisions
and/or are subject to the portfolio companys achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse
events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the
Company. As of December 31, 2021 and December 31, 2020, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment. In the normal course of its business, we invest or trade in various financial instruments and may enter into various investment activities
with off-balance sheet risk, which may include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at
specific terms at future dates. These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount
recognized in our Consolidated Statements of Assets and Liabilities. Distributions The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal
year to date:  Date Declared

Record Date


Payment Date


AmountFiscal 2022March 1, 2022


March 18, 2022



April 1, 2022


$
0.10February 3, 2022


February 17, 2022



March 1, 2022



0.10January 5, 2022


January 20, 2022



February 2, 2022



0.10YTD Total (2022)









$
0.30Fiscal 2021December 1, 2021


December 16, 2021



January 5, 2022


$
0.10November 3, 2021


November 18, 2021



December 2, 2021



0.10October 6, 2021


October 21, 2021



November 3, 2021



0.10September 9, 2021


September 23, 2021



October 1, 2021



0.10August 3, 2021


August 19, 2021



September 3, 2021



0.10July 7, 2021


July 22, 2021



August 3, 2021



0.10June 4, 2021


June 23, 2021



July 2, 2021



0.10May 5, 2021


May 20, 2021



June 2, 2021



0.10April 6, 2021


April 21, 2021



April 30, 2021



0.10February 24, 2021


March 18, 2021



April 2, 2021



0.10February 3,2021


February 18, 2021



March 2, 2021



0.10January 8, 2021


January 25, 2021



February 2, 2021



0.10Total (2021)









$
1.20Fiscal 2022March 1, 2022


March 18, 2022



April 1, 2022


$
0.10February 3, 2022


February 17, 2022



March 1, 2022



0.10January 5, 2022


January 20, 2022



February 2, 2022



0.10YTD Total (2022)









$
0.30  93




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##### Table of Contents

Date Declared

Record Date

Payment Date

AmountFiscal 2020December 8, 2020

December 22, 2020

January 5, 2021

$
0.10November 5, 2020

November 19, 2020

December 2, 2020


0.10October 6, 2020

October 22, 2020

October 30, 2020


0.10September 9, 2020

September 24, 2020

October 2, 2020


0.10August 4, 2020

August 20, 2020

September 2, 2020


0.10July 7, 2020

July 22, 2020

July 31, 2020


0.10June 4, 2020

June 18, 2020

July 1, 2020


0.10May 7, 2020

May 22, 2020

June 2, 2020


0.10April 2, 2020

April 23, 2020

May 1, 2020


0.1175February 20, 2020

March 19, 2020

April 3, 2020


0.1175February 4,2020

February 20, 2020

February 28, 2020


0.1175January 8, 2020

January 23, 2020

January 31, 2020


0.1175Total (2020)





$
1.27 Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the
calendar year. Future distributions, if any, will be determined by our Board. We expect that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable. We have elected to be taxed as a RIC under
Subchapter M of the Code. To maintain our RIC status, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available
for distribution. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available
for such distributions, we may in the future decide to retain such capital gains for investment. We maintain an opt out
dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically
opt out of the dividend reinvestment plan so as to receive cash distributions. We may not be able to achieve operating
results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a business development company, we may in the
future be limited in our ability to make distributions. Also, our revolving credit facility may limit our ability to declare distributions if we default under certain provisions. If we do not distribute a certain percentage of our income annually,
we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a regulated investment company. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not
yet received in cash, such as contractual payment-in-kind income, which represents contractual interest added to the loan balance that becomes due at the end of the loan
term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company
taxable income to obtain tax benefits as a regulated investment company. With respect to the distributions to stockholders, income from
origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders. For the fiscal years ended December 31, 2021 and
December 31, 2020, 0.0% and 18.4% of distributions were funded from the waiver of management and/or incentive fees.  94




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##### Table of Contents

Related Parties We have entered into a number of business relationships with affiliated or related parties, including the following:  

We have entered into the Advisory Agreement with SLR Capital Partners. Mr. Gross, our Chairman, Co-Chief Executive Officer and President and Mr. Spohler, our Co-Chief Executive Office, Chief Operating Officer and board member, are managing members and senior
investment professionals of, and have financial and controlling interests in, the Investment Adviser. In addition, Mr. Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for SLR Capital Partners.  

The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in
performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief compliance officer, our chief financial officer and their
respective staffs.  

We have entered into a license agreement with the Investment Adviser, pursuant to which the Investment Adviser
has granted us a non-exclusive, royalty-free license to use the licensed marks Solar and SLR. The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part,
with ours. For example, the Investment Adviser presently serves as investment adviser to SLR Investment Corp., a publicly traded BDC, which focuses on investing in senior secured loans, and to a lesser extent unsecured loans and equity securities,
as well as SCP Private Income BDC LLC, an unlisted BDC that focuses primarily in senior secured loans, including asset-based loans and first lien loans and SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in
senior secured loans and other debt instruments typically to middle market companies within the healthcare industry. In addition, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, Bruce
Spohler, our Co-Chief Executive Officer and Chief Operating Officer, and Richard L. Peteka, our Chief Financial Officer, serve in similar capacities for SLR Investment Corp., SCP Private Credit Income BDC LLC
and SLR HC BDC LLC. The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment
and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such
investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Advisers allocation procedures. On June 13, 2017, the Adviser received an
exemptive order that permits the Company to participate in negotiated co-investment transactions with certain affiliates, in a manner consistent with the Companys investment objective, positions, policies, strategies and restrictions as well
as regulatory requirements and other pertinent factors, and pursuant to various conditions (the Order). If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity
whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis. Although the
Advisers investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and
other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Adviser. Related party transactions may occur among SLR Senior Investment Corp., SLR Healthcare ABL and SLR Business Credit. These transactions may
occur in the normal course of business. No administrative or other fees are paid to SLR Capital Partners by SLR Healthcare ABL or SLR Business Credit. In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also
remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.  95




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##### Table of Contents

Item 7A.
Quantitative and Qualitative Disclosures About Market Risk We are subject to financial market risks, including changes in interest rates. In addition, U.S. and global capital markets and credit markets
have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities
that we hold. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a
significant change in market interest rates will not have a material adverse effect on our net investment income. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have
reduced certain interest rates and LIBOR has decreased. In a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest
expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such difference could potentially
increase thereby increasing our net investment income. During the fiscal year ended December 31, 2021, certain of the investments in our comprehensive investment portfolio had floating interest rates. These floating rate investments were
primarily based on floating LIBOR and typically have durations of one to three months after which they reset to current market interest rates. Additionally, some of these investments have LIBOR floors. The Company also has revolving credit
facilities that are generally based on floating LIBOR. Assuming no changes to our balance sheet as of December 31, 2021 and no new defaults by portfolio companies, a hypothetical one percent decrease in LIBOR on our comprehensive floating rate
assets and liabilities would decrease our net investment income by one cent per average share over the next twelve months. Assuming no changes to our balance sheet as of December 31, 2021 and no new defaults by portfolio companies, a
hypothetical one percent increase in LIBOR on our comprehensive floating rate assets and liabilities would decrease our net investment income by approximately two cents per average share over the next twelve months. However, we may hedge against
interest rate fluctuations from time-to-time by using standard hedging instruments such as futures, options, swaps and forward contracts subject to the requirements of
the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in any benefits of certain changes in interest rates with respect to our portfolio of investments. At
December 31, 2021, we have no interest rate hedging instruments outstanding on our balance sheet.  Increase (Decrease) in LIBOR


(1.00
%)


1.00
%Increase (Decrease) in Net Investment Income Per Share Per Year

$
(0.01
)

$
(0.02
)  Item 8.
Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  Report of Independent Registered Public Accounting Firm


97Consolidated Statements of Assets 
& Liabilities as of December 31, 2021 and December 31, 2020


99Consolidated Statements of Operations for the years ended December 
31, 2021, 2020 and 2019


100Consolidated Statements of Changes in Net Assets for the years ended December 31,
 2021, 2020 and 2019


101Consolidated Statements of Cash Flows for the years ended December 
31, 2021, 2020 and 2019


102Consolidated Schedule of Investments as of December 
31, 2021 and December 31, 2020


103Notes to Consolidated Financial Statements


109  96




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##### Table of Contents

Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors SLR Senior
Investment Corp. (formerly, Solar Senior Capital Ltd.): Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of SLR Senior
Investment Corp. (and subsidiaries) (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the three-year period ended December 31,
2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and
2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial
statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our procedures included confirmation of securities owned as of December 31, 2021 and 2020, by correspondence with the custodian, portfolio companies or agents. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter
communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Fair value of investments As described in Notes 2 and 6 to the consolidated financial statements, the Company measures its investments at fair value. Investments are
valued using a market approach, an income approach, or both approaches, as applicable. In determining the fair value of investments whose market quotations are not  97




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##### Table of Contents

readily available, the Company makes subjective judgments and estimates using unobservable inputs. As of December 31, 2021, the fair value of such investments was $403 million. We identified the assessment of the fair value of investments with no readily determinable market value as a critical audit matter. A high
degree of auditor judgment was required to assess the Companys fair value assumptions. Specifically, subjective auditor judgment was required to assess the (1) credit risk associated with the borrower and its ability to make interest and
principal payments for debt investments and (2) selection of comparable companies and the financial performance multiples of such comparable companies used in the market approach for equity investments. Additionally, the involvement of
valuation professionals with specialized skills and knowledge was required to assist in evaluating the Companys fair value estimates. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal
controls over the Companys process to measure the fair value of investments, including controls related to the development of the above assumptions. For recently purchased investments we evaluated changes in the borrowers assessed credit risk
and market yields from the purchase date to year end. We evaluated the Companys ability to estimate fair value by comparing dispositions to the Companys most recent fair value estimate prior to the disposition. We also involved valuation
professionals with specialized skills and knowledge, who for a selection of investments developed estimates of fair value by assessing available market information using market yields of comparable companies of similar credit risk, for debt
investments fair valued using an income approach, and financial performance multiples of comparable companies, for equity investments fair valued using a market approach, and compared the results to the Companys fair value estimates. /s/ KPMG LLP We have served as the
Companys auditor since 2010. New York, New York March 1, 2022  98




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except share amounts)  December 31, 2021


December 31, 2020AssetsInvestments at fair value:Companies less than 5% owned (cost: $297,174 and $251,163, respectively)

$
287,255


$
246,963Companies more than 25% owned (cost: $117,439 and $98,439, respectively)


115,867



93,867Cash


5,839



3,851Cash equivalents (cost: $160,000 and $299,998, respectively)


160,000



299,998Interest receivable


1,323



1,373Dividends receivable


2,143



1,753Receivable for investments sold


263



Prepaid expenses and other assets


197



192Total assets

$
572,887


$
647,997LiabilitiesDebt ($161,500 and $90,403 face amounts, respectively, reported net of unamortized debt issuance
costs of $1,581 and $1,910, respectively. See note 7)

$
159,919


$
88,493Payable for cash equivalents purchased


160,000



299,998Distributions payable


1,605



1,605Management fee payable (see note 3)


1,038



Interest payable (see note 7)


1,081



1,312Administrative services payable (see note 3)


846



646Other liabilities and accrued expenses


715



539Total liabilities

$
325,204


$
392,593Commitments and contingencies (see note 11)Net AssetsCommon stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized,
respectively, and 16,049,034 and 16,049,034 issued and outstanding, respectively

$
160


$
160Paid-in capital in excess of par (see note 2f)


270,781



274,205Accumulated distributable net loss (see note 2f)


(23,258
)


(18,961
)Total net assets

$
247,683


$
255,404Net Asset Value Per Share

$
15.43


$
15.91 See notes to consolidated financial statements.  99




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share amounts)  Year ended December 31,2021


2020


2019INVESTMENT INCOME:Interest:Companies less than 5% owned

$
20,095


$
22,830


$
30,496Companies 5% to 25% owned










386Dividends:Companies more than 25% owned


9,130



8,500



9,060Other income:Companies less than 5% owned


94



474



122Companies 5% to 25% owned










27Total investment income


29,319



31,804



40,091EXPENSES:Management fees (see note 3)

$
3,907


$
4,119


$
4,799Performance-based incentive fees (see note 3)






95



1,484Interest and other credit facility expenses (see note 7)


6,923



7,898



10,738Administrative services expense (see note 3)


1,710



1,575



1,575Other general and administrative expenses


2,459



1,485



1,667Total expenses


14,999



15,172



20,263Management fees waived (see note 3)






(3,655
)


(1,317
)Performance-based incentive fees waived (see note 3)






(95
)


(1,476
)Net expenses


14,999



11,422



17,470Net investment income

$
14,320


$
20,382


$
22,621REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:Net realized gain (loss) on investments and cash equivalents:Companies less than 5% owned

$
(63
)

$
193


$
(6,741
)Companies 5% to 25% owned










1,979Net realized gain (loss) on investments and cash equivalents


(63
)


193



(4,762
)Net change in unrealized gain (loss) on investments and cash equivalents:Companies less than 5% owned


(5,719
)


(1,918
)


4,861Companies 5% to 25% owned










1,174Companies more than 25% owned


3,000



(4,733
)


(950
)Net change in unrealized gain (loss) on investments and cash equivalents


(2,719
)


(6,651
)


5,085Net realized and unrealized gain (loss) on investments and cash equivalents


(2,782
)


(6,458
)


323NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$
11,538


$
13,924


$
22,944EARNINGS PER SHARE (see note 5)

$
0.72


$
0.87


$
1.43 See notes to consolidated financial statements.  100




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (in thousands, except share amounts)  Year ended December 31,2021


2020


2019Increase (decrease) in net assets resulting from operations:Net investment income

$
14,320


$
20,382


$
22,621Net realized gain (loss)


(63
)


193



(4,762
)Net change in unrealized gain (loss)


(2,719
)


(6,651
)


5,085Net increase in net assets resulting from operations


11,538



13,924



22,944Distributions to stockholders (see note 9a):From net investment income


(15,974
)


(12,544
)


(15,924
)From return of capital


(3,285
)


(7,838
)


(6,697
)Net distributions to stockholders


(19,259
)


(20,382
)


(22,621
)Capital transactions (see note 13):Reinvestment of distributions






48



99Net increase in net assets resulting from capital transactions






48



99Total increase (decrease) in net assets


(7,721
)


(6,410
)


422Net assets at beginning of year


255,404



261,814



261,392Net assets at end of year

$
247,683


$
255,404


$
261,814Capital share activity (see note 13):Common stock issued from reinvestment of distributions






2,820



5,729Net increase from capital share activity






2,820



5,729   See notes to consolidated financial statements.  101




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)  Year ended December 31,2021


2020


2019Cash Flows from Operating Activities:Net increase in net assets resulting from operations

$
11,538


$
13,924


$
22,944Adjustments to reconcile net increase in net assets resulting from operations to net cash provided
by (used in) operating activities:Net realized (gain) loss on investments and cash equivalents


63



(193
)


4,762Net change in unrealized (gain) loss on investments and cash equivalents


2,719



6,651



(5,085
)(Increase) decrease in operating assets:Purchase of investments


(191,893
)


(70,737
)


(108,104
)Proceeds from disposition of investments


128,116



185,203



99,300Net accretion of discount on investments


(1,054
)


(1,094
)


(1,262
)Capitalization of
payment-in-kind income


(243
)


(395
)


(513
)Collection of
payment-in-kind income










748Receivable for investments sold


(263
)


6,667



(6,580
)Interest receivable


50



560



208Dividends receivable


(390
)


140



Prepaid expenses and other assets


(5
)


56



(60
)Increase (decrease) in operating liabilities:Payable for investments and cash equivalents purchased


(139,998
)


198,187



79,006Management fee payable


1,038



(426
)


(763
)Performance-based incentive fees payable










(106
)Administrative services expense payable


200



(180
)


(97
)Interest payable


(231
)


140



(88
)Other liabilities and accrued expenses


176



(184
)


(103
)Deferred financing costs


805



722



527Net Cash Provided by (Used in) Operating Activities


(189,372
)


339,041



84,734Cash Flows from Financing Activities:Cash distributions paid


(19,259
)


(20,614
)


(22,522
)Proceeds from issuance of unsecured debt






84,270



Proceeds from secured borrowings


199,124



92,500



141,765Repayments of secured borrowings


(128,503
)


(298,300
)


(101,900
)Net Cash Provided by (Used in) Financing Activities


51,362



(142,144
)


17,343NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(138,010
)


196,897



102,077CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


303,849



106,952



4,875CASH AND CASH EQUIVALENTS AT END OF YEAR

$
165,839


$
303,849


$
106,952Supplemental disclosure of cash flow information:Cash paid for interest

$
7,154


$
7,758


$
10,826 Non-cash financing activities consist of the reinvestment of dividends
of $0, $48 and $99 for the fiscal years ended December 31, 2021, 2020 and 2019, respectively. See notes to consolidated financial
statements.  102




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2021 (in thousands, except share/unit amounts)  Description

Industry

Spread above
Index (3)

LiborFloor


Interest Rate(1)


Acquisition
Date

MaturityDate


ParAmount


Cost


FairValueBank Debt/Senior Secured Loans  115.9%Aegis Toxicology Sciences
Corporation(2)

Health Care Providers & Services

L+550


1.00
%


6.50
%

5/7/2018


5/9/2025


$
7,905


$
7,825


$
7,905Alimera Sciences, Inc.(2).

Pharmaceuticals

L+765


1.78
%


9.43
%

12/31/2019


7/1/2024



3,085



3,152



3,147All State Ag Parts, LLC(2).

Trading Companies & Distributors

L+500


1.00
%


6.00
%

9/1/2021


9/1/2026



2,152



2,122



2,152Alteon Health, LLC (f/k/a Island
Medical)(2)

Health Care Providers & Services

L+650


1.00
%


7.50
%

3/31/2017


9/1/2023



6,904



6,886



6,904American Teleconferencing Services,
Ltd.*

Communications Equipment

L+650


1.00
%


7.50
%

5/5/2016


9/9/2021



11,313



11,133



1,525American Teleconferencing Services,
Ltd.*

Communications Equipment

L+650


1.00
%


7.50
%

9/17/2021


3/31/2022



2,085



2,052



2,085Arcutis Biotherapeutics, Inc.(4)

Pharmaceuticals

L+745


0.10
%


7.55
%

12/22/2021


1/1/2027



3,333



3,319



3,318BayMark Health Services, Inc.(2)

Health Care Providers & Services

L+500


1.00
%


6.00
%

6/29/2021


6/11/2027



12,250



12,132



12,250BridgeBio Pharma, Inc.(4)


Biotechnology








9.00
%

11/17/2021


11/17/2026



6,000



5,915



5,910CC SAG Holdings Corp. (Spectrum Automotive)(2)

Diversified Consumer Services

L+575


0.75
%


6.50
%

6/29/2021


6/29/2028



4,032



3,975



4,032Cerapedics, Inc.(2)

Health Care Equipment & Supplies

L+695


2.50
%


9.45
%

3/22/2019


3/1/2025



4,121



4,222



4,214Community Brands ParentCo, LLC (f/k/a Ministry
Brands)(2)

Software

L+400


1.00
%


5.00
%

6/11/2021


12/2/2022



13,883



13,859



13,883Composite Technology Acquisition Corp. (ClockSpring)
(2)

Building Products

L+500


1.00
%


6.00
%

2/1/2019


2/1/2025



10,712



10,623



10,605DISA Holdings Acquisition Subsidiary Corp.(2)

Professional Services

L+400


1.00
%


5.00
%

6/14/2018


6/30/2022



9,061



9,053



9,061Drilling Info Holdings, Inc.(2)

IT Services

L+450






4.60
%

1/31/2020


7/30/2025



11,306



11,091



11,306ENS Holdings III Corp. & ES Opco USA LLC (BlueFin)(2)

Trading Companies & Distributors

L+475


1.00
%


5.75
%

12/31/2019


12/31/2025



6,041



5,956



6,041Erie Construction Mid-west, LLC(2)

Building Products

L+475


1.00
%


5.75
%

8/5/2021


7/30/2027



9,189



9,037



9,189Foundation Consumer Brands, LLC(2)

Personal Products

L+638


1.00
%


7.38
%

2/12/2021


2/12/2027



10,886



10,647



10,886Glooko, Inc.(2)

Health Care Technology

L+790


0.10
%


8.00
%

9/30/2021


10/1/2026



1,563



1,558



1,555GSM Acquisition Corp.(2)

Leisure Equipment & Products

L+500


1.00
%


6.00
%

4/20/2021


11/16/2026



11,102



10,999



11,102Higginbotham Insurance Agency, Inc.(2)

Insurance

L+550


0.75
%


6.25
%

11/25/2020


11/25/2026



6,286



6,204



6,286High Street Buyer, Inc.(2)

Insurance

L+600


0.75
%


6.75
%

4/16/2021


4/16/2028



7,240



7,101



7,240Ivy Fertility Services, LLC

Health Care Providers & Services

L+625


1.00
%


7.25
%

12/22/2021


2/25/2026



7,183



7,058



7,057KORE Wireless Group, Inc.(2)(4)

Wireless Telecommunication Services

L+550






5.72
%

12/21/2018


12/21/2024



11,803



11,671



11,803Logix Holding Company, LLC(2)

Communications Equipment

L+575


1.00
%


6.75
%

8/11/2017


12/22/2024



11,018



10,956



10,687Maurices, Incorporated(2)

Specialty Retail

L+675


1.00
%


7.75
%

8/27/2021


6/1/2024



1,996



1,960



1,996NAC Holdings Corporation (Jaguar)(2)

Insurance

L+525


1.00
%


6.25
%

7/30/2021


9/28/2024



5,277



5,212



5,250National Spine and Pain Centers, LLC

Health Care Providers & Services

L+500


1.00
%


6.00
%

9/18/2018


6/2/2024



2,506



2,501



2,481Neuronetics, Inc.(2).

Health Care Equipment & Supplies

L+765


1.66
%


9.31
%

3/2/2020


2/28/2025



2,400



2,440



2,440Pinnacle Treatment Centers, Inc.(2)

Health Care Providers & Services

L+575


1.00
%


6.75
%

1/22/2020


12/31/2022



3,768



3,754



3,768Plastics Management, LLC(2)

Health Care Providers & Services

L+500


1.00
%


6.00
%

8/26/2021


8/18/2027



5,701



5,619



5,644PPT Management Holdings, LLC(2)


Health Care Providers & Services

L+800(8)


1.00
%


9.00
%

12/15/2016


12/16/2022



9,077



9,062



7,897RQM+ Corp.(2)

Life Sciences Tools & Services

L+575


1.00
%


6.75
%

8/20/2021


8/12/2026



5,469



5,417



5,455RSC Acquisition, Inc.(2)

Insurance

L+550


0.75
%


6.25
%

10/5/2020


11/1/2026



3,921



3,814



3,921Rubius Therapeutics, Inc.(2)(4)

Pharmaceuticals

L+550


2.10
%


7.60
%

12/21/2018


6/1/2026



6,182



6,306



6,305RxSense Holdings LLC(2)

Diversified Consumer Services

L+500


1.00
%


6.00
%

3/17/2020


3/13/2026



8,461



8,339



8,461scPharmaceuticals, Inc.(2)

Pharmaceuticals

L+795


2.23
%


10.18
%

9/17/2019


9/17/2023



629



639



638SHO Holding I Corporation (Shoes for
Crews)(2)

Footwear

L+523


1.00
%


6.23
%

11/20/2015


4/27/2024



5,764



5,749



5,476SOC Telemed, Inc.(2)

Health Care Providers & Services

L+747


0.13
%


7.60
%

3/26/2021


4/1/2026



5,197



5,210



5,210SunMed Group Holdings, LLC(2)

Health Care Equipment & Supplies

L+575


0.75
%


6.50
%

6/16/2021


6/16/2028



6,142



6,041



6,081TAUC Management, LLC(2)

Health Care Providers & Services

L+525


1.00
%


6.25
%

2/12/2021


2/12/2027



6,052



5,972



5,992Tilley Chemical Buyer,Inc

Trading Companies & Distributors

L+600


1.00
%


7.00
%

12/8/2021


12/31/2026



7,675



7,580



7,579Ultimate Baked Goods Midco LLC (Rise
Baking)(2)

Packaged Foods & Meats

L+625


1.00
%


7.25
%

8/12/2021


8/13/2027



6,422



6,270



6,262Vessco Midco Holdings, LLC(2).

Water Utilities

L+450


1.00
%


5.50
%

9/3/2021


11/2/2026



1,037



1,027



1,027World Insurance Associates, LLC(2).

Insurance

L+575


1.00
%


6.75
%

10/12/2020


4/1/2026



14,993



14,648



14,993Total Bank Debt/Senior Secured Loans


$
296,106


$
287,019Common Equity/Equity Interests/Warrants  46.9%







Shares/UnitsEssence Group Holdings Corporation (Lumeris) Warrants. ..

Health Care Technology











3/22/2017






52,000


$
16


$
64Senseonics Holdings, Inc.(4)

Health Care Equipment & Supplies











7/25/2019






62,430



18



167SLR Business Credit (f/k/a/ North
Mill)(4)(5)(7)

Diversified Financial Services











10/20/2017






100



86,000



80,000SLR Healthcare ABL (f/k/a/
Gemino)(4)(5)

Diversified Financial Services











9/30/2013






32,839



31,439



35,867TwentyEighty Investors, LLC.

Professional Services











1/31/2017






17,214



1,000



5Venus Concept Ltd. Warrants (f/k/a Restoration Robotics)

Health Care Equipment & Supplies











5/10/2018






6,078



34



Total Common Equity/Equity Interests/Warrants












$
118,507


$
116,103Total Investments(6)
162.8%


$
414,613


$
403,122Par AmountCash Equivalents  64.6%U.S. Treasury Bill

Government











12/31/2021


1/25/2022


$
160,000


$
160,000


$
160,000Total Investments & Cash Equivalents 227.4%


$
574,613


$
563,122Liabilities in Excess of Other Assets  (127.4%)







(315,439
)Net Assets  100.0%






$
247,683 See notes to consolidated financial statements.  103




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) December 31, 2021 (in thousands)  (1)
Floating rate debt investments typically bear interest at a rate determined by reference to either the London
Interbank Offered Rate (LIBOR or L) index rate or the prime index rate (PRIME or P), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current interest
rate in effect as of December 31, 2021. (2)
Indicates an investment that is wholly or partially held by SLR Senior Investment Corp. (the
Company, we, us or our) through its wholly-owned financing subsidiary SUNS SPV LLC (the SUNS SPV). Such investments are pledged as collateral under the Senior Secured Revolving Credit
Facility (the Credit Facility) (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company. (3)
Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR
or PRIME rate. These instruments are often subject to a LIBOR or PRIME rate floor. (4)
Indicates assets that the Company believes may not represent qualifying assets under
Section 55(a) of the Investment Company Act of 1940 (1940 Act), as amended. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from making
follow-on investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2021, on a fair value
basis, non-qualifying assets in the portfolio represented 25.0% of the total assets of the Company. (5)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies
of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended
December 31, 2021 in these controlled investments are as follows:  Name of Issuer

Fair Value atDecember 31, 2020


GrossAdditions


GrossReductions


RealizedGain(Loss)


Change inUnrealizedGain(Loss)


Dividend /OtherIncome


Fair Value atDecember 31, 2021SLR Healthcare ABL

$
35,367


$



$



$



$
500


$
3,460


$
35,867SLR Business Credit


58,500



19,000











2,500



5,670



80,000$
93,867


$
19,000


$



$



$
3,000


$
9,130


$
115,867  (6)
Aggregate net unrealized depreciation for U.S. federal income tax purposes is $631; aggregate gross unrealized
appreciation and depreciation for U.S. federal tax purposes is $70,926 and $71,557, respectively, based on a tax cost of $403,753. The Company generally acquires its investments in private transactions exempt from registration under the Securities
Act of 1933, as amended (the Securities Act). These investments are generally subject to certain limitations on resale, and may be deemed to be restricted securities under the Securities Act. All investments are Level 3
unless otherwise indicated. (7)
Our equity investment in SLR Business Credit is partially held through ESP SSC Corporation, a taxable
consolidated subsidiary. (8)
Spread is 6.00% Cash / 2.00% PIK. 
Non-income producing security. 
Investment contains a
payment-in-kind (PIK) feature. *
Investment is on non-accrual status. See notes to consolidated financial statements.  104




---

##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) December 31, 2021  Industry Classification

Percentage of TotalInvestments (atfair value) as ofDecember 31, 2021Diversified Financial Services (includes SLR Healthcare ABL and SLR Business Credit)


28.7
%Health Care Providers & Services


16.2
%Insurance


9.3
%Building Products


4.9
%Trading Companies & Distributors


3.9
%Communications Equipment


3.5
%Software


3.4
%Pharmaceuticals


3.3
%Health Care Equipment & Supplies


3.2
%Diversified Consumer Services


3.1
%Wireless Telecommunication Services


2.9
%IT Services


2.8
%Leisure Equipment & Products


2.8
%Personal Products


2.7
%Professional Services


2.2
%Packaged Foods & Meats


1.6
%Biotechnology


1.5
%Footwear


1.4
%Life Sciences Tools & Services


1.4
%Specialty Retail


0.5
%Health Care Technology


0.4
%Water Utilities


0.3
%Total Investments


100.0
%  See notes to consolidated financial
statements.  105




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2020 (in thousands, except share/unit amounts)  Description

Industry

Spread aboveIndex (3)


LiborFloor


Interest Rate(1)


AcquisitionDate


MaturityDate


ParAmount


Cost


FairValueBank Debt/Senior Secured Loans  96.6%Aegis Toxicology Sciences
Corporation(2)(9)

Health Care Providers & Services


L+550



1.00
%


6.50
%


5/7/2018



5/9/2025


$
10,752


$
10,618


$
10,537Alimera Sciences, Inc.(2).

Pharmaceuticals


L+765



1.78
%


9.43
%


12/31/2019



7/1/2024



3,085



3,118



3,116Alteon Health, LLC (f/k/a Island
Medical)(2)(9)

Health Care Providers & Services


L+650



1.00
%


7.50
%


3/31/2017



9/1/2023



6,991



6,962



6,851American Teleconferencing Services, Ltd. (PGI)(2)

Communications Equipment


L+650



1.00
%


7.50
%


5/5/2016



6/8/2023



13,666



13,439



12,641AQA Acquisition Holding, Inc.(2)

Software


L+425



1.00
%


5.25
%


9/7/2018



5/24/2023



5,560



5,529



5,560Cerapedics, Inc.(2)

Health Care Equipment & Supplies


L+695



2.50
%


9.45
%


3/22/2019



3/1/2024



3,709



3,759



3,765Composite Technology Acquisition Corp. (ClockSpring)
(2)(9).

Building Products


L+475



1.00
%


5.75
%


2/1/2019



2/1/2025



10,823



10,708



10,174Confie Seguros Holding II Co.(2)(9)

Insurance


L+475



1.00
%


5.75
%


10/13/2016



4/19/2022



14,173



14,135



13,998DISA Holdings Acquisition Subsidiary
Corp.(2)

Professional Services


L+425



1.00
%


5.25
%


6/14/2018



6/30/2022



9,664



9,643



9,277Drilling Info Holdings, Inc.(2)

IT Services


L+450







4.65
%


1/31/2020



7/30/2025



11,452



11,180



11,252Empower Payments Acquisition, Inc.
(RevSpring).(2)

Professional Services


L+425







4.47
%


11/28/2016



10/11/2025



4,900



4,891



4,802ENS Holdings III Corp. & ES Opco USA LLC
(BlueFin)(2)

Trading Companies & Distributors


L+475



1.00
%


5.75
%


12/31/2019



12/31/2025



6,138



6,032



6,107Galway Partners Holdings, LLC (f/k/a
Edgewood)(2)(9)

Insurance


L+425



1.00
%


5.25
%


3/28/2018



9/8/2024



16,541



16,505



16,541GenMark Diagnostics, Inc(2)(4)

Health Care Providers & Services


L+590



2.51
%


8.41
%


2/1/2019



2/1/2023



7,598



7,808



7,807Higginbotham Insurance Agency, Inc.(2)

Insurance


L+575



0.75
%


6.50
%


11/25/2020



11/25/2026



4,927



4,854



4,853Kindred Biosciences, Inc(2)(10)

Pharmaceuticals


L+675



2.17
%


8.92
%


9/30/2019



9/30/2024



1,408



1,415



1,415KORE Wireless Group, Inc.(2)

Wireless Telecommunication Services


L+550







5.75
%


12/21/2018



12/21/2024



11,805



11,634



11,805Logix Holding Company, LLC(2)(9)

Communications Equipment


L+575



1.00
%


6.75
%


8/11/2017



12/22/2024



10,463



10,396



10,253MHE Intermediate Holdings, LLC (TFS-Miner)(2)(9)

Air Freight & Logistics


L+500



1.00
%


6.00
%


3/8/2017



3/10/2024



5,859



5,827



5,800Ministry Brands, LLC(2)(9)

Software


L+400



1.00
%


5.00
%


11/21/2016



12/2/2022



14,029



13,979



13,818National Spine and Pain Centers, LLC
(9)

Health Care Providers & Services


L+525



1.00
%


6.25
%


9/18/2018



6/2/2024



2,532



2,525



2,469Neuronetics, Inc.(2).

Health Care Equipment & Supplies


L+765



1.66
%


9.31
%


3/2/2020



2/28/2025



2,400



2,411



2,411Pet Holdings ULC & Pet Supermarket, Inc.
(4)(9)

Specialty Retail


L+550



1.00
%


6.50
%


9/18/2018



7/5/2022



4,500



4,479



4,455Pinnacle Treatment Centers, Inc.(9)

Health Care Providers & Services


L+625



1.00
%


7.25
%


1/22/2020



12/31/2022



3,698



3,671



3,698PPT Management Holdings, LLC(2)


Health Care Providers & Services


L+850
(8)


1.00
%


9.50
%


12/15/2016



12/16/2022



8,947



8,916



8,142RSC Acquisition, Inc.(2)

Insurance


L+550



1.00
%


6.50
%


10/5/2020



11/1/2026



958



930



929Rubius Therapeutics, Inc.(2)(4)

Pharmaceuticals


L+550







5.65
%


12/21/2018



12/21/2023



6,182



6,243



6,251RxSense Holdings LLC(2)

Diversified Consumer Services


L+500



1.00
%


6.00
%


3/17/2020



3/13/2026



8,296



8,149



8,296scPharmaceuticals, Inc.(2)

Pharmaceuticals


L+795



2.23
%


10.18
%


9/17/2019



9/17/2023



719



724



725Sentry Data Systems, Inc.(2).

Software


L+675



1.00
%


7.75
%


9/27/2020



10/6/2025



5,144



5,045



5,041SHO Holding I Corporation (Shoes for Crews)(2)


Footwear


L+523
(11)


1.00
%


6.23
%


11/20/2015



4/27/2024



5,792



5,769



5,213SI-BONE,
Inc.(2)(4)

Health Care Equipment & Supplies


L+940



0.33
%


9.73
%


5/29/2020



6/1/2025



2,742



2,744



2,742Smile Doctors LLC.

Personal Products


L+600



1.00
%


7.00
%


12/17/2020



10/6/2022



1,077



1,056



1,056Trinity Partners, LLC(2).

Professional Services


L+525



1.00
%


6.25
%


12/11/2020



2/21/2025



2,049



2,029



2,029U.S. Acute Care Solutions, LLC(2)(9)


Health Care Providers & Services


L+600
(12)


1.00
%


7.00
%


12/22/2016



5/15/2021



6,271



6,265



6,271World Insurance Associates, LLC(2).

Insurance


L+550



1.00
%


6.50
%


10/12/2020



4/1/2026



10,025



9,731



9,724Worldwide Facilities, LLC(2)

Insurance


L+450







4.65
%


9/13/2019



9/5/2026



7,088



6,965



7,052Total Bank Debt/Senior Secured Loans


$
250,084


$
246,876Common Equity/Equity Interests/Warrants  36.8%
















Shares/UnitsEssence Group Holdings Corporation (Lumeris) Warrants. ..

Health Care Technology














3/22/2017







52,000


$
16


$
65Gemino Healthcare Finance, LLC(4)(5)

Diversified Financial Services














9/30/2013







32,839



31,439



35,367North Mill Holdco LLC(4)(5)(7)

Diversified Financial Services














10/20/2017







100



67,000



58,500Senseonics Holdings, Inc. Warrants

Health Care Equipment & Supplies














7/25/2019







80,838



18



12TwentyEighty Investors, LLC.

Professional Services














1/31/2017







17,214



1,011



10Venus Concept Ltd. Warrants (f/k/a Restoration Robotics)

Health Care Equipment & Supplies














5/10/2018







6,078



34



Total Common Equity/Equity Interests/Warrants


$
99,518


$
93,954Total Investments(6)
133.4%


$
349,602


$
340,830Par AmountCash Equivalents  117.5%U.S. Treasury Bill

Government














12/31/2020



2/23/2021


$
300,000


$
299,998


$
299,998Total Investments & Cash Equivalents 250.9%


$
649,600


$
640,828Liabilities in Excess of Other Assets (150.9%)







(385,424
)Net Assets  100.0%





























$
255,404 See notes to consolidated financial statements.  106




---

##### Table of Contents

SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) December 31, 2020 (in thousands)  (1)
Floating rate debt investments typically bear interest at a rate determined by reference to either the London
Interbank Offered Rate (LIBOR or L) index rate or the prime index rate (PRIME or P), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current interest
rate in effect as of December 31, 2020. (2)
Indicates an investment that is wholly or partially held by SLR Senior Investment Corp. through its
wholly-owned financing subsidiary SUNS SPV LLC (the SUNS SPV). Such investments are pledged as collateral under the Senior Secured Revolving Credit Facility (the Credit Facility) (see Note 7 to the consolidated financial
statements) and are not generally available to creditors, if any, of the Company. (3)
Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR
or PRIME rate. These instruments are often subject to a LIBOR or PRIME rate floor. (4)
Indicates assets that the Company believes may not represent qualifying assets under
Section 55(a) of the Investment Company Act of 1940 (1940 Act), as amended. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from making
follow-on investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2020, on a fair value
basis, non-qualifying assets in the portfolio represented 17.8% of the total assets of the Company. (5)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies
of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended
December 31, 2020 in these controlled investments are as follows:  Name of Issuer

Fair Value atDecember 31, 2019


GrossAdditions


GrossReductions


RealizedGain(Loss)


Change inUnrealizedGain(Loss)


Dividend /OtherIncome


Fair Value atDecember 31, 2020Gemino Healthcare Finance, LLC

$
36,100


$



$



$



$
(733
)

$
3,460


$
35,367North Mill Holdco LLC


62,500















(4,000
)


5,040



58,500$
98,600


$



$



$



$
(4,733
)

$
8,500


$
93,867  (6)
Aggregate net unrealized appreciation for U.S. federal income tax purposes is $3,226; aggregate gross
unrealized appreciation and depreciation for U.S. federal tax purposes is $59,516 and $56,290, respectively, based on a tax cost of $337,604. The Company generally acquires its investments in private transactions exempt from registration under the
Securities Act of 1933, as amended (the Securities Act). These investments are generally subject to certain limitations on resale, and may be deemed to be restricted securities under the Securities Act. All investments are
Level 3 unless otherwise indicated. (7)
Our equity investment in North Mill Capital LLC is partially held through ESP SSC Corporation, a taxable
consolidated subsidiary. (8)
Spread is 6.00% Cash / 2.50% PIK. (9)
Indicates an investment that is wholly or partially held by SLR Senior Investment Corp. through its
wholly-owned financing subsidiary FLLP 2015-1 LLC (the FLLP SPV). Such investments are pledged as collateral under the FLLP 2015-1, LLC Credit Facility (the
FLLP Facility) (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company. (10)
Kindred Biosciences, Inc., KindredBio Equine, Inc. and Centaur Biopharmaceutical Services, Inc. are co-borrowers. (11)
Spread is 3.00% Cash / 2.23% PIK. (12)
Spread is 5.00% Cash / 1.00% PIK. 
Non-income producing security. 
Investment contains a
payment-in-kind (PIK) feature. See notes to consolidated financial statements.  107




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SLR SENIOR INVESTMENT CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) December 31, 2020  Industry Classification

Percentage of TotalInvestments (atfair value) as ofDecember 31, 2020Diversified Financial Services (includes Gemino Healthcare Finance, LLC and North Mill Holdco
LLC)


27.6
%Insurance


15.6
%Health Care Providers & Services


12.7
%Software


7.2
%Communications Equipment


6.7
%Professional Services


4.7
%Wireless Telecommunication Services


3.5
%Pharmaceuticals


3.4
%IT Services


3.3
%Building Products


3.0
%Health Care Equipment & Supplies


2.6
%Diversified Consumer Services


2.4
%Trading Companies & Distributors


1.8
%Air Freight & Logistics


1.7
%Footwear


1.5
%Specialty Retail


1.3
%Commercial Services & Supplies


0.7
%Personal Products


0.3
%Health Care Technology


0.0
%Total Investments


100.0
%  See notes to consolidated financial
statements.  108




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (in thousands, except share amounts) Note 1. Organization SLR Senior
Investment Corp. (SLR Senior, the Company, SUNS, we, us, or our), a Maryland corporation formed on December 16, 2010, is a
closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (BDC) under
the Investment Company Act of 1940, as amended (the 1940 Act). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 946. In addition, for U.S. federal income tax purposes, we have elected to be treated, and intend to qualify annually, as a regulated investment company (RIC), under Subchapter M of the Internal
Revenue Code of 1986, as amended (the Code). On January 28, 2011, SLR Senior was capitalized with initial equity of $2
and commenced operations. On February 24, 2011, SLR Senior priced its initial public offering, selling 9.0 million shares, including the underwriters over-allotment, raising approximately $168,000 of net proceeds. Concurrent with
this offering, our senior management team purchased an additional 500,000 shares through a private placement, raising another $10,000. The Companys investment objective is to seek to maximize current income consistent with the preservation of capital. We seek to achieve
our investment objective by investing directly or indirectly in senior secured loans, including first lien and second lien debt instruments, made primarily to leveraged private middle-market companies whose debt is rated below investment grade,
which the Company refers to collectively as senior loans. From time to time, we may also invest in public companies that are thinly traded. Under normal market conditions, at least 80% of the value of the Companys net assets
(including the amount of any borrowings for investment purposes) will be directly or indirectly invested in senior loans. On
December 1, 2021, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with SLR Investment Corp., a Maryland corporation (SLRC), Solstice Merger Sub, Inc., a Maryland corporation and a wholly-owned subsidiary of
SLRC (Merger Sub), and, solely for the limited purposes set forth therein, SLR Capital Partners, LLC (f/k/a Solar Capital Partners, LLC) (the Investment Adviser). The Merger Agreement provides that, subject to the conditions
set forth in the Merger Agreement, Merger Sub will merge with and into us, with us continuing as the surviving company and as SLRCs wholly-owned subsidiary (the Merger,) and, immediately thereafter, we will merge with and into
SLRC, with SLRC continuing as the surviving company (together with the Merger, the Mergers). See Note 14 for additional information. Note
2. Significant Accounting Policies The accompanying consolidated financial statements have been prepared on the accrual basis of
accounting in conformity with U.S. generally accepted accounting principles (GAAP), and include the accounts of the Company and certain wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and
reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been
eliminated. Certain prior period amounts may have been reclassified to conform to current period presentation. The preparation of
consolidated financial statements in conformity with GAAP and pursuant to the requirements for reporting on Form 10-K and Regulation S-X, as appropriate, also requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the  109




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for the fair presentation of
financial statements, have been included. The significant accounting policies consistently followed by the Company are:  (a)
Investment transactions are accounted for on the trade date;  (b)
The Company conducts the valuation of its assets in accordance with GAAP and the 1940 Act. The Company
generally values its assets on a quarterly basis, or more frequently if required. Investments for which market quotations are readily available on an exchange are valued at the closing price on the date of valuation. The Company may also obtain
quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, management determines whether the quote obtained is sufficient according to GAAP to determine the fair value of
the investment. If determined adequate, the Company uses the quote obtained. Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair
value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of the Companys board of
directors (the Board). Investments for which reliable market quotations are not readily available or for
which the pricing sources do not provide a valuation or methodology or provide a valuation or methodology that, in the judgment of the Investment Adviser or the Board does not represent fair value, shall be valued as follows: (i) each portfolio
company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuations are discussed with senior management of the Investment Adviser; (iii) independent valuation
firms engaged by, or on behalf of, the Board will conduct independent appraisals and review the Investment Advisers preliminary valuations and make their own independent assessment for (a) each portfolio investment that, when taken
together with all other investments in the same portfolio company, exceeds 10% of estimated total assets, plus available borrowings, as of the end of the most recently completed fiscal quarter, and (b) each portfolio investment that is
presently in payment default and the Investment Adviser does not expect to reach an agreement with the portfolio company in the subsequent quarter; (iv) the Board will discuss the valuations and determine the fair value of each investment in
our portfolio in good faith based on the input of the Investment Adviser and, where appropriate, the respective independent valuation firm. The recommendation of fair value generally considers the following factors among others, as relevant: applicable market yields; the nature and
realizable value of any collateral; the portfolio companys ability to make payments; the portfolio companys earnings and discounted cash flow; the markets in which the issuer does business; and comparisons to publicly traded securities,
among others. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will
consider the pricing indicated by the external event to corroborate the valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may
differ significantly from the  110




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  values that would have been used had a readily available market value existed for such investments, and the differences could be material. Investments are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, in accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946, may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other
relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a
single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing
our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and
realizable value of any collateral, the portfolio companys ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are
public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the fiscal year ended
December 31, 2021, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process. ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy: Level1: Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at
the measurement date. Level2: Quoted prices for similar assets or liabilities in active markets, or quoted
prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. Level3: Unobservable inputs for the asset or liability. In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the
lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The
exercise of judgment is based in part on our knowledge of the asset class and our prior experience.  (c)
Gains or losses on investments are calculated by using the specific identification method.  (d)
The Company records dividend income and interest, adjusted for amortization of premium and accretion of
discount, on an accrual basis. Loan origination fees, original issue discount, and market discounts are capitalized and we amortize such amounts into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan
origination fees are recorded as interest income. We record call premiums on loans repaid as interest income when we receive such amounts. Capital structuring fees, amendment fees, consent fees, and any other
non-recurring fee income as well as management fee and other fee income for services rendered, if any, are recorded as other income when earned.  (e)
The Company intends to comply with the applicable provisions of the Code pertaining to regulated investment
companies to make distributions of taxable income sufficient to relieve it of substantially all  111




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  U.S. federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will
accrue excise tax on such estimated excess taxable income as appropriate.  (f)
Book and tax basis differences relating to stockholder distributions and other permanent book and tax
differences are typically reclassified among the Companys capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP; accordingly at
December 31, 2021, $139 was reclassified on our balance sheet between accumulated distributable net loss and paid-in capital in excess of par. Total earnings and net asset value are not affected.  (g)
Distributions to common stockholders are recorded as of the record date. The amount to be paid out as a
distribution is determined by the Board. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually.  (h)
In accordance with Regulation S-X and ASC Topic
810Consolidation, the Company consolidates its interest in controlled investment company subsidiaries, financing subsidiaries and certain wholly-owned holding companies that serve to facilitate investment in portfolio companies. In
addition, the Company may also consolidate any controlled operating companies substantially all of whose business consists of providing services to the Company.  (i)
The accounting records of the Company are maintained in U.S. dollars. Any assets and liabilities denominated in
foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against the U.S. dollar on the date of valuation. The Company will not isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations would be included with the net unrealized gain or loss from investments. The Companys investments in
foreign securities, if any, may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the
investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments in terms of U.S. dollars and therefore the earnings of the Company.  (j)
In accordance with ASC 835-30, the Company reports origination and
other expenses related to certain debt issuances, if any, as a direct deduction from the carrying amount of the debt liability. Applicable expenses are deferred and amortized using either the effective interest method or the straight-line method
over the stated life. The straight-line method may be used on revolving facilities and/or when it approximates the effective yield method.  (k)
The Company records expenses related to shelf registration statements and applicable equity offering costs as
prepaid assets. These expenses are typically charged as a reduction of capital upon the sale of shares or expensed, in accordance with ASC 946-20-25.  (l)
Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when principal or interest cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest are paid in cash, and in managements judgment, are likely to continue timely payment of their remaining principal and
interest obligations. Cash interest payments received on such investments may be recognized as income or applied to principal depending on managements judgment.  112




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  (m)
The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and
so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less would qualify, with limited exceptions. The Company believes
that certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents. Recent Accounting Pronouncements In March 2020, the FASB issued
Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional
expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the
reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is evaluating the potential impact that the adoption of this guidance will
have on the Companys financial statements. Note 3. Agreements SLR Senior has an Advisory Agreement with the Investment Adviser, under which the Investment Adviser manages the
day-to-day operations of, and provides investment advisory services to, SLR Senior. For providing these services, the Investment Adviser receives a fee from SLR Senior,
consisting of two componentsa base management fee and a performance-based incentive fee. The base management fee is calculated at an annual rate of 1.00% of gross assets. For services rendered under the Advisory Agreement, the base management
fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters. Base management fees for any partial month or quarter will be
appropriately pro-rated. For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in
the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills, other short-term U.S. government or government agency securities, repurchase agreements or cash borrowings. The performance-based incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income,
dividend income and any other income (other than fees for providing managerial assistance) accrued during the calendar quarter, minus our operating expenses for the quarter (excluding the performance-based incentive fee). Pre-incentive fee net investment income includes, in the case of investments, if any, with a deferred interest feature (such as original issue discount, debt instruments with pay-in-kind interest and zero-coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net
investment income does not include any realized capital gains or losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value
of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized). The Company pays the Investment Adviser a performance-based incentive fee with respect to pre-incentive fee net investment income for each calendar quarter as follows:  

no performance-based incentive fee in any calendar quarter in which our
pre-incentive fee net investment income does not exceed the hurdle of 1.75%;  113




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  

50% of pre-incentive fee net investment income with respect to that
portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.9167% in any calendar quarter (11.67% annualized); and  

20% of the amount of pre-incentive fee net investment income, if any,
that exceeds 2.9167% in any calendar quarter (11.67% annualized) will be payable to the Investment Adviser. The second
part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and will equal 20% of the Companys
cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment
basis at the end of each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. For financial statement purposes, the second part of the
performance-based incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital appreciation. No accrual was required for the fiscal years ended December 31, 2021, 2020 and 2019. For the fiscal years ended December 31, 2021, 2020 and 2019, the Company recognized $3,907, $4,119 and $4,799, respectively, in gross
base management fees and $0, $95 and $1,484, respectively, in gross performance-based incentive fees. For the fiscal years ended December 31, 2021, 2020 and 2019, $0, $3,655 and $1,317, respectively, of such base management fees were waived.
For the fiscal years ended December 31, 2021, 2020 and 2019, $0, $95 and $1,476, respectively, of such performance-based incentive fees were waived. For the fiscal years ended December 31, 2021, 2020 and 2019, there were no
performance-based incentive fees recaptured by the Investment Adviser. The below voluntary fee waivers were made at the Investment Advisers discretion and are subject to recapture by the Investment Adviser and reimbursement by the Company
under the conditions noted below. No fees will be recouped by the Investment Adviser if (i) for the period in which recoupment occurs, the ratio of operating expenses to average net assets, when considering the reimbursement, exceeds the same
ratio for the period in which the waiver occurred; (ii) for the period in which recoupment occurs, the annualized distribution rate cannot fall below the annualized distribution rate for the period in which the waiver occurred; and
(iii) recoupment can only occur within three years from the date of the waiver. In the event the merger with SLR Investment Corp. is consummated, the Investment Adviser will not recoup any of the below fees. The table below presents a summary
of fees waived that may be subject to recoupment:  Three Months
Ended

Management andPerformance-Based IncentiveFees Waived


Management andPerformance-BasedIncentive Fees Recouped


Unreimbursed Managementand Performance-BasedIncentive Fees


Ratio ofOperatingExpense toAverageNet Assetsfor thePeriod(1)


AnnualizedDistributionRate for thePeriod(2)


Eligible for RecoupmentThroughJune 30, 2020

$
959


$



$
959



0.23
%


8.71
%


March 31, 2022September 30, 2020


722







722



0.33
%


7.72
%


June 30, 2022December 31, 2020


1,049







1,049



0.31
%


7.60
%


September 30, 2022Total

$
2,730


$



$
2,730  (1)
Operating expense includes all expenses borne by the Company, except for organizational and offering costs,
base management fees, performance-based incentive fees and interest expense. The ratios presented are not annualized.  114




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  (2)
Annualized distribution rate equals the annualized rate of distributions paid to stockholders based on the
amount of the distributions declared prior to the date that the waivers of expenses related to management and performance-based incentive fees were incurred. SLR Senior has also entered into an Administration Agreement with SLR Capital Management, LLC (the Administrator) under which the
Administrator provides administrative services for SLR Senior. For providing these services, facilities and personnel, SLR Senior reimburses the Administrator for SLR Seniors allocable portion of overhead and other expenses incurred by the
Administrator in performing its obligations under the Administration Agreement, including rent. The Administrator will also provide, on SLR Seniors behalf, managerial assistance to those portfolio companies to which SLR Senior is required to
provide such assistance. The Company typically reimburses the Administrator on a quarterly basis. For the fiscal years ended
December 31, 2021, 2020 and 2019, the Company recognized expenses under the Administration Agreement of $1,710, $1,575 and $1,575, respectively. No managerial assistance fees were accrued or collected for the fiscal years ended
December 31, 2021, 2020 and 2019. Note 4. Net Asset Value Per Share At December 31, 2021, the Companys total net assets and net asset value per share were $247,683 and $15.43, respectively. This
compares to total net assets and net asset value per share at December 31, 2020 of $255,404 and $15.91, respectively. Note 5. Earnings Per
Share The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from
operations, pursuant to ASC 260-10, for the years ended December 31, 2021, 2020 and 2019:  Year endedDecember 31, 2021


Year endedDecember 31, 2020


Year endedDecember 31, 2019Earnings per share (basic & diluted)Numeratornet increase in net assets resulting from operations:

$
11,538


$
13,924


$
22,944Denominatorweighted average shares:


16,049,034



16,048,777



16,043,542Earnings per share:

$
0.72


$
0.87


$
1.43 Note 6. Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used
to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair
value hierarchy are as follows: Level1. Financial assets and liabilities whose values are based on
unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.  115




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Level2. Financial assets and liabilities whose values are
based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:  a)
Quoted prices for similar assets or liabilities in active markets;  b)
Quoted prices for identical or similar assets or liabilities in
non-active markets;  c)
Pricing models whose inputs are observable for substantially the full term of the asset or liability; and  d)
Pricing models whose inputs are derived principally from or corroborated by observable market data through
correlation or other means for substantially the full term of the asset or liability. Level3.Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect managements and, if
applicable, an independent third-party valuation firms own assumptions about the assumptions a market participant would use in pricing the asset or liability. When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is
categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable
(Level 3). Gains and losses for assets and liabilities categorized within the Level 3 table below may include changes in fair
value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). A review of fair
value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Such reclassifications involving Level 3 assets
and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as
Level 1. The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of
December 31, 2021 and December 31, 2020: Fair Value Measurements As of December 31, 2021  Level 1


Level 2


Level 3


TotalAssets:Bank Debt/Senior Secured Loans

$



$



$
287,019


$
287,019Common Equity/Equity Interests/Warrants


167







115,936



116,103Total Investments$

$
167


$



$
402,955


$
403,122  116




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Fair Value Measurements As of December 31, 2020  Level 1


Level 2


Level 3


TotalAssets:Bank Debt/Senior Secured Loans

$



$



$
246,876


$
246,876Common Equity/Equity Interests/Warrants










93,954



93,954Total Investments

$



$



$
340,830


$
340,830 The following table provides a summary of the changes in fair value of Level 3 assets for the year ended
December 31, 2021, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2021:  Bank Debt/SeniorSecured Loans


CommonEquity/EquityInterests/Warrants


TotalFair value, December 31, 2020

$
246,876


$
93,954


$
340,830Total gains or losses included in earnings:Net realized gain


3







3Net change in unrealized gain (loss)


(5,879
)


3,006



(2,873
)Purchase of investment securities


174,190



19,000



193,190Proceeds from dispositions of investment securities


(128,171
)


(11
)


(128,182
)Transfers in/out of Level 3(1)






(13
)


(13
)Fair value, December 31, 2021

$
287,019


$
115,936


$
402,955Unrealized gains (losses) for the period relating to those Level 3 assets that were still
held by the Company at the end of the period:Net change in unrealized gain (loss):

$
(5,879
)

$
3,006


$
(2,873
)  (1)
On February 17, 2021, the Company exercised its warrants in Senseonics Holdings, Inc., receiving shares in
the common stock of Senseonics Holdings, Inc. The common stock of Senseonics Holdings, Inc. is publicly traded, so this position is considered to be a Level 1 asset.  117




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  The following table provides a summary of the changes in fair value of Level 3 assets
for the year ended December 31, 2020, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2020:  Bank Debt/SeniorSecured Loans


CommonEquity/EquityInterests/Warrants


TotalFair value, December 31, 2019

$
361,456


$
98,809


$
460,265Total gains or losses included in earnings:Net realized gain


169







169Net change in unrealized loss


(1,982
)


(4,671
)


(6,653
)Purchase of investment securities


72,227







72,227Proceeds from dispositions of investment securities


(184,994
)


(184
)


(185,178
)Transfers in/out of Level 3










Fair value, December 31, 2020

$
246,876


$
93,954


$
340,830Unrealized losses for the period relating to those Level 3 assets that were still held by the
Company at the end of the period:Net change in unrealized loss:

$
(1,982
)

$
(4,671
)

$
(6,653
) Quantitative Information about Level 3 Fair Value Measurements The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is
ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms
and risks associated with an investment. Among other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our
investment within each portfolio company. Significant unobservable quantitative inputs typically used in the fair value measurement of
the Companys Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as
enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (EBITDA) multiples of similar companies, and comparable market transactions for equity securities.  118




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Quantitative information about the Companys Level 3 asset fair value measurements
as of December 31, 2021 is summarized in the table below:  Asset orLiability

Fair Value atDecember 31,2021


Principal ValuationTechnique/Methodology

Unobservable Input

Range (WeightedAverage)Bank Debt / Senior Secured Loans

Asset

$
283,409


Income Approach

Market Yield

4.7% 25.1% (7.6%)Asset

$
3,610


Market Multiple(1)

Comparable Multiple

2.0x-3.0x(2.5x)/2.0x-3.0x(2.5x)Common Equity/Equity Interests/Warrants

Asset

$
115,936


Market Approach(2)

Return on Equity

6.1% 37.9% (19.3%)  (1)
Investments are valued using a
sum-of-the parts analysis, using expected EBITDA multiples (2x-3x) for certain segments of the business and expected revenue
multiples (2x-3x) for certain segments of the business. (2)
Includes $64 of investments valued using a Black-Scholes model, $5 of investments valued using a weighted
valuation approach and $115,867 of investments valued using a return on equity. Significant increases or decreases in
any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, would result in a significantly lower or higher fair value measurement for such
assets. Quantitative information about the Companys Level 3 asset fair value measurements as of December 31, 2020 is
summarized in the table below:  Asset orLiability

Fair Value atDecember 31,2020


Principal ValuationTechnique/Methodology

Unobservable Input

Range (WeightedAverage)Bank Debt / Senior Secured Loans

Asset

$
246,876


Income Approach

Market Yield

4.9% 13.1% (7.5%)Common Equity/Equity Interests/Warrants

Asset

$
93,954


Market Approach(1)

Return on Equity

(10.3%) - 20.7%(16.2%)  (1)
Includes $77 of investments valued using a Black-Scholes model, $10 of investments valued using a weighted
valuation approach and $93,867 of investments valued using a return on equity. Significant increases or decreases in
any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, would result in a significantly lower or higher fair value measurement for such
assets.  119




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Note 7. Debt Our debt obligations consisted of the following as of December 31, 2021 and December 31, 2020:  December 31, 2021


December 31, 2020Facility

Face Amount


Carrying Value


Face Amount


Carrying ValueCredit Facility

$
76,500


$
75,410
(1)

$



$
(913
)(1)FLLP Facility







(2)


5,403



5,036
(2)2025 Unsecured Notes


85,000



84,509
(3)


85,000



84,370
(3)$
161,500


$
159,919


$
90,403


$
88,493  (1)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $1,090 and $913, respectively,
as of December 31, 2021 and December 31, 2020. (2)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $0 and $367, respectively, as
of December 31, 2021 and December 31, 2020. (3)
Carrying Value equals the Face Amount net of unamortized debt issuance costs of $491 and $630, respectively, as
of December 31, 2021 and December 31, 2020. Unsecured Notes On March 31, 2020, the Company closed a private offering of $85,000 of senior unsecured notes due 2025 (the 2025 Unsecured
Notes) with a fixed interest rate of 3.90% and a maturity date of March 31, 2025. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. The 2025 Unsecured Notes were issued in a private placement
only to qualified institutional buyers. Revolving Loan Facilities On August 26, 2011, the Company established our wholly-owned subsidiary, SUNS SPV LLC (the SUNS SPV) which entered into the
Credit Facility with Citigroup Global Markets Inc. acting as administrative agent. On January 10, 2017, commitments to the Credit Facility, as amended, were increased from $175,000 to $200,000 by utilizing the accordion feature. The commitment
can also be expanded up to $600,000. The stated interest rate on the Credit Facility is LIBOR plus 2.00% with no LIBOR floor requirement and the current final maturity date is June 1, 2026. The Credit Facility is secured by all of the assets
held by SUNS SPV. Under the terms of the Credit Facility, SLR Senior and SUNS SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions,
reporting requirements and other customary requirements for similar credit facilities. The Credit Facility also includes usual and customary events of default for credit facilities of this nature. The Credit Facility was amended on November 7,
2012, June 30, 2014 and May 29, 2015 to extend maturities and add greater investment flexibility, among other changes. On June 1, 2018, the Credit Facility was refinanced by way of amendment, allowing for greater investment
flexibility and the extension of the maturity date, among other changes. On July 13, 2018, commitments to the Credit Facility, as amended, were increased from $200,000 to $225,000 by utilizing the accordion feature. On June 7, 2021, the
Credit Facility maturity date was extended to June 1, 2026 and was amended to add greater investment flexibility, among other changes. There were $76,500 of borrowings outstanding as of December 31, 2021 under the Credit Facility. On May 31, 2019, the Company as transferor and FLLP 2015-1, LLC, a wholly-owned subsidiary of the
Company, as borrower entered into amendment number five to the $75,000 FLLP Facility with Wells Fargo  120




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Bank, NA acting as administrative agent. The Company acts as servicer under the FLLP Facility. The FLLP Facility is scheduled to mature on May 31, 2024. The FLLP Facility generally bears
interest at a rate of LIBOR plus a range of 2.15-2.25%. The Company and FLLP 2015-1, LLC, as applicable, have made certain customary representations and warranties, and
are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The FLLP Facility also includes usual and customary events of default for credit
facilities of this nature. On May 14, 2021, the maximum facility amount was reduced from $75,000 to $11,303 and the reinvestment period was terminated. On September 30, 2021, the FLLP Facility was repaid and terminated. The average annualized interest cost for all borrowings for the year ended December 31, 2021 and the year ended December 31, 2020
was 3.36% and 3.49%, respectively. These costs are exclusive of other credit facility expenses such as unused fees and fees paid to the back-up servicer, if any. The maximum amount borrowed on the revolving
credit facilities during the year ended December 31, 2021 and the year ended December 31, 2020, was $173,600 and $215,003, respectively. Note 8. Financial Highlights The
following is a schedule of financial highlights for the respective years:  Year endedDecember 31, 2021


Year endedDecember 31, 2020


Year endedDecember 31, 2019


Year endedDecember 31, 2018


Year endedDecember 31, 2017Per Share Data: (a)Net asset value, beginning of year

$
15.91


$
16.32


$
16.30


$
16.84


$
16.80Net investment income


0.89



1.27



1.41



1.41



1.41Net realized and unrealized gain (loss)


(0.17
)


(0.41
)


0.02



(0.54
)


0.04Net increase in net assets resulting from operations


0.72



0.86



1.43



0.87



1.45Distributions to stockholders (see note 9a):From net investment income


(1.00
)


(0.78
)


(0.99
)


(1.41
)


(1.41
)From return of capital


(0.20
)


(0.49
)


(0.42
)






Offering costs and other


















Net asset value, end of year

$
15.43


$
15.91


$
16.32


$
16.30


$
16.84Per share market value, end of year

$
13.98


$
14.46


$
17.60


$
15.12


$
17.76Total Return(b)


5.28
%


(9.77
%)


26.42
%


(7.28
%)


17.11
%Net assets, end of year

$
247,683


$
255,404


$
261,814


$
261,392


$
270,131Shares outstanding, end of year


16,049,034



16,049,034



16,046,214



16,040,485



16,036,730Ratios to average net assets:Net investment income


5.63
%


8.16
%


8.63
%


8.38
%


8.39
%Operating expenses


3.17
%


1.41
%*


2.57
%*


3.48
%*


2.12
%*Interest and other credit facility expenses


2.72
%


3.16
%


4.10
%


2.89
%


1.43
%Total expenses


5.89
%


4.57
%*


6.67
%*


6.37
%*


3.55
%*Average debt outstanding

$
126,518


$
155,131


$
212,465


$
168,359


$
100,700Portfolio turnover ratio


34.5
%


17.8
%


21.4
%


42.5
%


41.4
%  (a)
Calculated using the average shares outstanding method. (b)
Total return is based on the change in market price per share during the year and takes into account any
distributions, if any, reinvested in accordance with the dividend reinvestment plan. Total return does not include a sales load.  121




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  *
The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is
shown net of a voluntary incentive fee waiver (see note 3). For the year ended December 31, 2020, the ratios of operating expenses to average net assets and total expenses to average net assets would be 2.91% and 6.08%, respectively, without
the voluntary management and incentive fee waivers. For the year ended December 31, 2019, the ratios of operating expenses to average net assets and total expenses to average net assets would be 3.63% and 7.73%, respectively, without the
voluntary management and incentive fee waivers. For the year ended December 31, 2018, the ratios of operating expenses to average net assets and total expenses to average net assets would be 3.89% and 6.78%, respectively, without the voluntary
management and incentive fee waivers. For the year ended December 31, 2017, the ratios of operating expenses to average net assets and total expenses to average net assets would be 3.11% and 4.54%, respectively, without the voluntary management
and incentive fee waivers. Note 9(a). Income Tax Information and Distributions to Stockholders The tax character of distributions for the fiscal years ended December 31, 2021, 2020 and 2019 were as follows (1):  2021


2020


2019Ordinary income

$
15,974



82.9
%

$
12,544



61.5
%

$
15,924



70.4
%Capital gains






0.0
%






0.0
%






0.0
%Return of capital


3,285



17.1
%


7,838



38.5
%


6,697



29.6
%Total distributions

$
19,259



100.0
%

$
20,382



100.0
%

$
22,621



100.0
% As of December 31, 2021, 2020 and 2019 the total accumulated earnings (loss) on a tax basis were as
follows (1):  2021


2020


2019Undistributed ordinary income

$



$



$
Undistributed long-term net capital gains










Total undistributed net earnings










Other book/tax temporary differences


1,057



1,049



1,044Post-October capital losses










Capital loss carryforward


(23,684
)


(23,237
)


(23,426
)Net unrealized appreciation (depreciation) investments


(631
)


3,227



1,855Total tax accumulated loss

$
(23,258
)

$
(18,961
)

$
(20,527
)  (1)
Tax information for the fiscal years ended December 31, 2021, 2020 and 2019 are/were estimates and are not
final until the Company files its tax returns, typically in September or October each year. The Company recognizes in
its consolidated financial statements the tax effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. To the best of our knowledge, we did not have any uncertain
tax positions that met the recognition or measurement criteria of ASC 740-10-25 nor did we have any unrecognized tax benefits as of the periods presented herein.
Although we file federal and state tax returns, our major tax jurisdiction is federal. Our tax returns for each of our  122




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  federal tax years since 2018 remain subject to examination by the Internal Revenue Service and the state department of revenue. The capital loss carryforwards shown above do not expire. Note 9(b). Other Tax Information (unaudited) No distributions paid during the fiscal years ended December 31, 2021, 2020 or 2019 were eligible for qualified dividend income treatment
or were eligible for the dividends received deduction for corporate stockholders. For the fiscal years ended December 31, 2021, 2020, and 2019, 99.70%, 100% and 99.25%, respectively, of each of the distributions paid during the year represent
interest-related dividends. For the fiscal years ended December 31, 2021, 2020 and 2019, none of the distributions represent short-term capital gains dividends. Note 10. SLR Healthcare ABL We acquired
an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (SLR Healthcare) on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured,
asset-based loans for small and mid-sized companies operating in the healthcare industry. Our initial investment in SLR Healthcare ABL was $32,839. The management team of SLR Healthcare co-invested in the transaction and continues to lead SLR Healthcare. As of December 31, 2021, SLR Healthcares management team and SLR Senior own approximately 7% and 93% of the equity in SLR Healthcare,
respectively. Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year, non-recourse, $100,000 credit facility with non-affiliates, which was expandable to $150,000 under its accordion feature. Effective March 31, 2014, the credit facility
was expanded to $105,000 and again on June 27, 2014 to $110,000. On May 27, 2016, SLR Healthcare entered into a new $125,000 credit facility which replaced the previously existing facility. The new facility has similar terms as compared to
the previous facility and includes an accordion feature increase to $200,000 and had a maturity date of May 27, 2020. On June 28, 2019, this $125,000 facility was amended, extending the maturity date to June 28, 2023. SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of
December 31, 2021, the portfolio totaled approximately $183,501 of commitments with a total net investment in loans of $81,604 on total assets of $91,275. As of December 31, 2020, the portfolio totaled approximately $218,028 of
commitments with a total net investment in loans of $39,340 on total assets of $58,881. At December 31, 2021, the portfolio consisted of 36 issuers with an average balance of approximately $2,267 versus 37 issuers with an average balance of
approximately $1,063 at December 31, 2020. All of the commitments in SLR Healthcares portfolio are floating-rate, senior-secured, cash-pay loans. SLR Healthcares credit facility, which is non-recourse to us, had approximately $60,000 and $25,000 of borrowings outstanding at December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021, 2020 and 2019, SLR
Healthcare had net income of $662, $4,289 and $3,559, respectively, on gross income of $10,052, $10,367 and $12,717, respectively. Due to timing and non-cash items, there may be material differences between
GAAP net income and cash available for distributions. SLR Healthcares consolidated financial statements for the fiscal years ended December 31, 2021 and December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.  123




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  Note 11. Commitments and Contingencies The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Healthcare. The total
amount of these unfunded commitments as of December 31, 2021 and December 31, 2020 is $56,135 and $24,760, respectively, comprised of the following:  December 31, 2021


December 31, 2020Arcutis Biotherpeutics, Inc

$
6,667


$
CC SAG Holdings Corp. (Spectrum Automotive)


6,239



NAC Holdings Corp


5,119



Glooko, Inc


4,689



Vessco Midco Holdings, LLC


4,592



BridgeBio Pharma, Inc


4,000



Plastics Management, LLC


3,547



Tilley Chemical Buyer, Inc


2,286



Maurices, Inc


2,195



Ivy Fertility Services, LLC


1,502



Drilling Info Holdings, Inc.


1,411



1,005SLR Healthcare ABL*


1,400



1,400RQM+ Corp


1,265



Composite Technology Acquisition Corp.


1,259



1,245RxSense Holdings LLC.


1,250



1,216Erie Construction Mid-west, LLC


1,247



TAUC Management, LLC


1,147



GSM Acquisition Corp


892



High Street Buyer, Inc


846



SOC Telemed, Inc


742



Foundation Consumer Brands, LLC


740



BayMark Health Services, Inc


689



Pinnacle Treatment Centers, Inc.


444



435Neuronetics, Inc.


343



1,028SunMed Group Holdings, LLC


339



World Insurance Associates, LLC.


272



1,081Ultimate Baked Goods Midco, LLC


265



American Teleconferencing Services, Ltd


261



All State Ag Parts, LLC


257



ENS Holdings III Corp. & ES Opco USA LLC


230



559Smile Doctors LLC






8,724RSC Acquisition, Inc






2,987Higginbotham Insurance Agency, Inc.






1,387Worldwide Facilities, LLC.






1,287Kindred Biosciences, Inc






1,056Trinity Partners, LLC.






694Sentry Data Systems, Inc.






514AQA Acquisition Holding, Inc.






142Total Commitments

$
56,135


$
24,760  *
The Company controls the funding of the SLR Healthcare commitment and may cancel it at its discretion.  124




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  The credit agreements of the above loan commitments contain customary lending provisions
and/or are subject to the portfolio companys achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse
events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the
Company. As of December 31, 2021 and December 31, 2020, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment. In the normal course of its business, we invest or trade in various financial instruments and may enter into various investment activities
with off-balance sheet risk, which may include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at
specific terms at future dates. These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount
recognized in our Consolidated Statements of Assets and Liabilities. Note 12. SLR Business Credit We acquired 100% of the equity interests of North Mill Capital LLC (NMC) on October 20, 2017. NMC is a leading asset-backed
lending commercial finance company that provides senior secured asset-backed financings to U.S. based small-to-medium-sized
businesses primarily in the manufacturing, services and distribution industries. We invested approximately $51,000 to effect the transaction. Subsequently, the Company contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately
thereafter, the Company and ESP SSC Corporation contributed their equity interests to NorthMill LLC (North Mill). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. The Company and ESP SSC
Corporation own 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (NM Holdco), a newly formed entity and ESP SSC Corporation acquired
100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and medium-sized businesses. As part of this transaction, the Companys 99% interest in the equity of
NMC was contributed to NM Holdco. This approximately $15,500 transaction was financed with borrowings on NMCs credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On
June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66,671 was financed with equity from the Company of $19,000 and
borrowings on NMCs credit facility of $47,671. SLR Business Credit currently manages a highly diverse portfolio of
directly-originated and underwritten senior-secured commitments. As of December 31, 2021, the portfolio totaled approximately $513,869 of commitments, of which $248,652 were funded, on total assets of $290,794. As of December 31,
2020, the portfolio totaled approximately $387,193 of commitments, of which $148,691 were funded, on total assets of $177,701. At December 31, 2021, the portfolio consisted of 125 issuers with an average balance of approximately $1,989
versus 126 issuers with an average balance of approximately $1,180 at December 31, 2020. NMC has a senior credit facility with a bank lending group for $225,000 which expires on November 13, 2024. Borrowings are secured by
substantially all of NMCs assets. NMCs credit facility, which is non-recourse to us, had approximately $183,252 and $111,091 of borrowings outstanding at December 31, 2021 and
December 31, 2020, respectively. For the years ended December 31, 2021, 2020 and 2019, SLR Business Credit had net income of $7,295, $4,512 and $2,184, respectively, on gross income of $24,021, $19,715 and $20,212,  125




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SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such,
and subject to fluctuations in SLR Business Credits funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments
to us. SLR Business Credits consolidated financial statements for the fiscal years ended December 31, 2021 and December 31, 2020 are attached as an exhibit to this annual report on Form 10-K. Note 13. Capital Share Transactions As of December 31, 2021 and December 31, 2020, 200,000,000 shares of $0.01 par value capital stock were authorized. Transactions in capital stock were as follows:  Shares


AmountYear endedDecember 31, 2021


Year endedDecember 31, 2020


Year endedDecember 31, 2021


Year endedDecember 31, 2020Shares issued in reinvestment of distributions






2,820


$



$
48Net increase






2,820


$



$
48 Note 14. Pending Merger with SLRC On December 1, 2021, we entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger
Agreement, Merger Sub will merge with and into us, with us continuing as the surviving company and as SLRCs wholly-owned subsidiary and, immediately thereafter, we will merge with and into SLRC, with SLRC continuing as the surviving company.
Both the Board and SLRCs board of directors, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of the independent directors of us or SLRC, as applicable, have
approved the Merger Agreement and the transactions contemplated thereby. At the effective time of the Merger (Effective
Time), each share of our common stock issued and outstanding immediately prior to the Effective Time (other than shares owned by SLRC or any of its controlled subsidiaries (the Cancelled Shares)) will be converted into the right to
receive a number of shares of SLRCs common stock equal to the Exchange Ratio (as defined below) (cash may be paid in lieu of fractional shares). As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the Effective Time (such date, the
Determination Date), each of us and SLRC will deliver to the other a calculation of its NAV as of such date, in each case using a pre-agreed set of assumptions, methodologies and adjustments. We
refer to such calculation with respect to us as the Closing SUNS Net Asset Value and with respect to SLRC as the Closing SLRC Net Asset Value. Based on such calculations, the parties will calculate the SUNS Per Share
NAV, which will be equal to (i) the Closing SUNS Net Asset Value divided by (ii) the number of shares of our common stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares), and the SLRC Per
Share NAV, which will be equal to (A) the Closing SLRC Net Asset Value divided by (B) the number of shares of SLRC Common Stock issued and outstanding as of the Determination Date. The Exchange Ratio will be equal to the
quotient (rounded to four decimal places) of (i) the SUNS Per Share NAV divided by (ii) the SLRC Per Share NAV.  126




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##### Table of Contents

SLR SENIOR INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) December 31, 2021 (in thousands, except share amounts)  We and SLRC will update and redeliver the Closing SUNS Net Asset Value or the Closing SLRC
Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and
holidays) prior to the Effective Time. The Merger Agreement contains customary representations and warranties by each of us, SLRC and SLR
Capital Partners. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of our and SLRCs businesses during the period prior to the closing of the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2022, is subject to certain
closing conditions, including requisite approvals of our and SLRCs stockholders and certain other closing conditions. The Merger
Agreement also contains certain termination rights in favor of us and SLRC, including if the Mergers are not completed on or before December 1, 2022 or if the requisite approvals of our or SLRCs stockholders are not obtained. The Merger
Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring us may be required to pay SLRC a termination fee of approximately $7,600. The Merger Agreement provides that, upon the
termination of the Merger Agreement under certain circumstances, a third party acquiring SLRC may be required to pay to us a termination fee of approximately $25,600. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is incorporated by reference as Exhibit 2.1 to this Annual Report and incorporated by reference herein. The representations, warranties, covenants and agreements contained in the Merger Agreement were made only
for purposes of the Merger Agreement and as of specific dates; were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger Agreement); may be subject to limitations agreed upon by the
parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of
materiality applicable to the contracting parties that differ from those applicable to investors. Investors and security holders should not rely on such representations, warranties, covenants or agreements, or any descriptions thereof, as
characterizations of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties,
covenants and agreements may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the Merger Agreement. Note 15. Subsequent Events The Company
has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. On January 5, 2022, the Board declared a monthly dividend of $0.10 per share payable on February 2, 2022 to holders of record as of
January 20, 2022. On February 3, 2022, the Board declared a monthly dividend of $0.10 per share payable on March 1, 2022
to holders of record as of February 17, 2022. On March 1, 2022, the Board declared a monthly dividend of $0.10 per share
payable on April 1, 2022 to holders of record as of March 18, 2022.  127




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##### Table of Contents

Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.  Item 9A.
Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures As of December 31, 2021 (the end of the period covered by this report), we, including our Co-Chief
Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that
evaluation, our management, including the Co-Chief Executive Officers and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that
information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our
management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of such possible controls and procedures. (b) Managements Report on
Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control
over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. The Companys internal control over financial reporting includes those policies and procedures that (i) pertain to
assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets
that could have a material effect on the financial statements. Management performed an assessment of the effectiveness of the
Companys internal control over financial reporting as of December 31, 2021 based upon the criteria in the 2013 Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on managements assessment, management determined that the Companys internal control over financial reporting was effective as of December 31, 2021. Due to the Company having annual investment income of less than $100 million during the fiscal year, the Company was not required to
obtain an attestation report from the Companys independent registered public accounting firm on the Companys internal control over financial reporting as of December 31, 2021. (c) Changes in Internal Controls Over Financial Reporting Management has not identified any change in the Companys internal control over financial reporting that occurred during the fourth fiscal
quarter of 2021 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.  Item 9B.
Other Information None.  Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable.  128




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##### Table of Contents

PART III  Item 10.
Directors, Executive Officers and Corporate Governance Information about Directors Certain
information with respect to each of the current directors is set forth below, including their names, ages, a brief description of their recent business experience, including present occupations and employment, certain directorships that each person
holds, the year in which each person became a director of the Company, and a discussion of their particular experience, qualifications, attributes or skills that lead us to conclude that such individual should serve as a director of the Company, in
light of the Companys business and structure. There were no legal proceedings of the type described in Item 401(f) of Regulation S-K in the past 10 years against any of the directors or
officers of the Company and none are currently pending. There is no arrangement or understanding between any of the Companys directors or officers pursuant to which they were selected as directors or officers and the Company or any other
person or entity. Mr. Gross is an interested person of SLR Senior as defined in the Investment Company Act of 1940
(the 1940 Act) due to his position as Co-Chief Executive Officer and President of the Company and a managing member of SLR Capital Partners, LLC (SLR Capital Partners), the
Companys investment adviser. Mr. Spohler is an interested person of the Company as defined in the 1940 Act due to his position as Co-Chief Executive Officer and Chief Operating Officer
of the Company and a managing member of SLR Capital Partners, the Companys investment adviser. Each of Mr. Wachter, Mr. Hochberg and Mr. Potter is not an interested person of the Company as defined in the 1940 Act.  Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During Past 5
Years

Other Directorships
Held by Director or Nominee
for Director During Past 5
Years(2)Interested DirectorMichael S. Gross, 60

Chairman of the Board of Directors, Co-Chief Executive Officer and President.

Class III Director since 2007; Term expires 2024.

Co-Chief Executive Officer of SLR Investment Corp., SLR Senior Investment Corp. and SCP Private Credit Income BDC LLC since June 2019 and of SLR HC BDC LLC since September 2020 and President
of SLR Investment Corp. since 2007, SLR Senior Investment Corp. since 2010, SCP Private Credit Income BDC LLC since 2018 and SLR HC BDC LLC since 2020; Sole Chief Executive Officer of SLR Investment Corp. (February 2007-June

Chairman of the Board of Directors of SLR Investment Corp. since 2010, of SCP Private Credit Income BDC LLC since 2018 and of SLR HC BDC LLC since 2020; Chairman of the Board of Directors of Global Ship Lease Inc.; Director of
Jarden Corporation (2007-2016); Chairman of the Board of Mt. Sinai Childrens Center Foundation; Director of New York Road Runners; Member of the Kellogg Global Advisory Board; and Member of the
Ross  129




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##### Table of Contents

Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During Past 5
Years

Other Directorships
Held by Director or Nominee
for Director During Past 5
Years(2)2019), of SLR Senior Investment Corp. (December 2010-June 2019) and of SCP Private Credit Income BDC LLC (June 2018-June 2019).

School Advisory Board at the University of Michigan. Mr. Gross intimate knowledge of the business and operations of SLR Capital Partners, extensive familiarity with the
financial industry and the investment management process in particular, and experience as a director of other public and private companies not only gives the board of directors valuable insight but also positions him well to continue to serve as the
Chairman of our board of directors.  Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During
Past 5 Years

Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years(2)Interested DirectorBruce Spohler, 61

Co-Chief Executive Officer, Chief Operating Officer and Director

Class II Director since 2009;
Term expires 2023.

Co-Chief Executive Officer of SLR Investment Corp., SLR Senior Investment Corp. and SCP Private Credit Income BDC LLC since June 2019 and of SLR HC BDC LLC since September 2020; Chief
Operating Officer of SLR Investment Corp. since February 2007, of SLR Senior Investment Corp. since December 2010 and of SCP Private Credit Income BDC LLC since June 2018, and of SLR HC BDC LLC since September 2020; previously, Managing Director and
a former Co-Head of U.S. Leveraged Finance for CIBC World Markets Inc., the investment banking subsidiary of the Canadian Imperial Bank of Commerce.

Director of SLR Investment Corp. since 2010, of SCP Private Credit Income BDC LLC since 2018 and of SLR HC BDC LLC since 2020. Mr. Spohlers depth of experience in managerial positions in investment management, leveraged finance and financial
services, as well as his intimate knowledge of SLR Capitals business and operations, gives the board of directors valuable industry-specific knowledge and expertise on these and other matters.  130




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##### Table of Contents

Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During
Past 5 Years

Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years(2)Independent DirectorSteven Hochberg, 60

Director

Class II Director since 2007; Term expires 2023.

Partner at Deerfield Management, a healthcare investment firm, since 2013. Co-founder and manager of Ascent Biomedical Ventures, a venture capital firm focused on early stage investment and
development of biomedical companies, since 2004.

Director of SLR Investment Corp. since 2011, of SCP Private Credit Income BDC LLC since 2018 of SLR HC BDC LLC since 2020, and of several private companies. Since 2011, Mr. Hochberg had been the Chairman of the Board of
Continuum Health Partners until its merger with Mount Sinai in 2013, where he is the Senior Vice Chairman of the Mount Sinai Health System, a non-profit healthcare integrated delivery system in New York City.
Director of a number of private healthcare companies and the Cardiovascular Research Foundation, an organization focused on advancing new technologies and education in the field of cardiovascular medicine. Mr. Hochbergs varied experience in investing in medical technology companies provides the board of directors with
particular knowledge of this field, and his role as chairman of other companies board of directors brings the perspective of a knowledgeable corporate leader.  131




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##### Table of Contents

Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During
Past 5 Years

Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years(2)Independent DirectorLeonard A. Potter, 60

Director

Class III Director since 2009; Term expires 2024.

President and Chief Investment Officer of Wildcat Capital Management, LLC since 2011; Co-founder and Senior Managing Director at Vida Ventures I and II, each a biotech venture fund, since
2017; Managing Director of Soros Private Equity at Soros Fund Management LLC from 2002 to 2009.

Director of SLR Investment Corp. since 2011, of SCP Private Credit Income BDC LLC since 2018, of SLR HC BDC LLC since 2020, of Hilton Grand Vacations Inc. since 2017, of SuRo Capital Corp. since 2011, and of several private
companies. Mr. Potters experience practicing as a corporate lawyer provides valuable insight to the board of directors on
regulatory and risk management issues. In addition, his tenure in private equity and other investments and service as a director of both public and private companies provide industry-specific knowledge and expertise to the board of directors.  Name, Address and Age(1)

Position(s) Held
with Company

Terms of Office and
Length of Time
Served

Principal
Occupation(s) During
Past 5 Years

Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years(2)Independent DirectorDavid S. Wachter, 58

Director

Class I Director since 2007; Term expires 2022.

Founding Partner and Managing Partner of W Capital Partners, a private equity fund manager, since 2001.

Director of SLR Investment Corp. since 2011, of SCP Private Credit Income BDC LLC since 2018, of SLR HC BDC LLC since 2020 and of several private companies. Mr. Wachters extensive knowledge of private equity and investment banking provides the board of directors with the
valuable insight of an experienced financial manager.  (1)
The business address of the director nominee and other directors is c/o SLR Senior Investment Corp., 500 Park
Avenue, New York, New York 10022. (2)
All of the Companys directors also serve as directors of SLR Investment Corp., SCP Private Credit Income
BDC LLC and SLR HC BDC LLC, which are investment companies that have each elected to be regulated as a business development company (BDC) and for which SLR Capital Partners serves as investment adviser. Mr. Potter also serves as a
director of SuRo Capital Corp., which is a closed-end management investment company that has elected to be regulated as a BDC.  132




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##### Table of Contents

Information about Executive Officers Who Are Not Directors The following information, as of December 31, 2021, pertains to our executive officers who are not directors of the Company.  Name, Address, and Age(1)

Position(s) Held with
Company

Principal Occupation(s) During Past 5 YearsRichard L. Peteka, 60

Chief Financial Officer, Treasurer and Secretary

Chief Financial Officer, Treasurer and Secretary of the Company and of SLR Investment Corp. since May 2012, of SCP Private Credit Income BDC LLC since June 2018 and of SLR HC BDC LLC since September 2020. Mr. Peteka joined the
Company from Apollo Investment Corporation, a publicly-traded business development company, where he served from 2004 to 2012 as the Chief Financial Officer and Treasurer.Guy Talarico, 66

Chief Compliance Officer

Chief Compliance Officer of SLR Investment Corp. since 2008, of SLR Senior Investment Corp. since 2010, of SCP Private Credit Income BDC LLC since 2018, of SLR HC BDC LLC since 2020 and of SLR Capital Partners, LLC since February
2016all affiliated entities; and Chief Executive Officer of Alaric Compliance Services, LLC (successor to EOS Compliance Services LLC) from December 2005 to December 2021. In December 2021, Alaric was acquired by Foreside Consulting Services,
LLC. Mr. Talarico serves as Senior Managing Director of Foreside Consulting Services, LLC. In conjunction with this primary occupation, Mr. Talarico has served and continues to serve as Chief Compliance Officer for other business
development companies, funds, and/or investment advisers who are not affiliated with the SLR Capital Partners entities.  (1)
The business address of the executive officers is c/o SLR Senior Investment Corp., 500 Park Avenue, New York,
New York 10022. Our common stock is listed on the NASDAQ Global Select Market under the symbol SUNS. Audit Committee The Audit Committee
operates pursuant to a charter approved by our board of directors, a copy of which is available on our website athttp://www.slrseniorinvestmentcorp.com. The charter sets forth the responsibilities of the Audit Committee. The Audit
Committees responsibilities include selecting the independent registered public accounting firm for the Company, reviewing with such independent registered public accounting firm the planning, scope and results of their audit of the
Companys financial statements, pre-approving the fees for services performed, reviewing with the independent registered public accounting firm the adequacy of internal control systems, reviewing the
Companys annual financial statements and periodic filings and receiving the Companys audit reports and financial statements. The Audit Committee also establishes guidelines and makes recommendations to our board of directors regarding
the valuation of our investments. The Audit Committee is responsible for aiding our board of directors in determining the fair value of debt and equity securities that are not publicly traded or for which current market values are not readily
available. The board of directors and Audit Committee utilize the services of nationally recognized third-party valuation firms to help determine the fair value of these securities. The Audit Committee is currently composed of Messrs. Hochberg,
Wachter and Potter,  133




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##### Table of Contents

all of whom are considered independent under the rules of the NASDAQ Stock Market and are not interested persons of the Company as that term is defined in Section 2(a)(19) of the
1940 Act. Mr. Hochberg serves as Chairman of the Audit Committee. Our board of directors has determined that Mr. Hochberg is an audit committee financial expert as that term is defined under Item 407 of Regulation S-K, as promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Mr. Hochberg meets the current independence and experience requirements of Rule 10A-3 of the Exchange Act. Communication with the Board of Directors Stockholders with questions about the Company are encouraged to contact the Companys investor relations department. However, if
stockholders believe that their questions have not been addressed, they may communicate with the Companys board of directors by sending their communications to SLR Senior Investment Corp., c/o Richard L. Peteka, Secretary, 500 Park Avenue, New
York, New York 10022. All stockholder communications received in this manner will be delivered to one or more members of the board of directors. Code
of Ethics The Company has adopted a code of ethics that applies to, among others, its senior officers, including its Co-Chief Executive Officers and its Chief Financial Officer, as well as every officer, director and employee of the Company. The Companys code of ethics can be accessed via its website athttp://www.slrseniorinvestmentcorp.com. The Company intends to disclose amendments to or waivers from a required provision of the code of ethics on Form 8-K. Nomination of Directors There have been
no material changes to the procedures by which stockholders may recommend nominees to our Board of Directors implemented since the filing of our Proxy Statement for our 2021 Annual Meeting of Stockholders.  Item 11.
Executive Compensation Compensation of Executive Officers None
of our officers receives direct compensation from the Company. As a result, we do not engage any compensation consultants. Mr. Gross, our Co-Chief Executive Officer and President, and Mr. Spohler,
our Co-Chief Executive Officer and Chief Operating Officer, through their ownership interest in SLR Capital Partners, our investment adviser, are entitled to a portion of any profits earned by SLR Capital
Partners, which includes any fees payable by us to SLR Capital Partners under the terms of the Advisory Agreement, less expenses incurred by SLR Capital Partners in performing its services under the Advisory Agreement. Messrs. Gross and Spohler do
not receive any additional compensation from SLR Capital Partners in connection with the management of our portfolio. Mr. Peteka,
our Chief Financial Officer, Treasurer and Secretary and, through Foreside Consulting Services, LLC, Guy Talarico, our Chief Compliance Officer, are paid by SLR Capital Management, our administrator, subject to reimbursement by us of an allocable
portion of such compensation for services rendered by such persons to the Company. To the extent that SLR Capital Management outsources any of its functions, we will pay the fees associated with such functions on a direct basis without profit to SLR
Capital Management.  134




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##### Table of Contents

Compensation of Directors The following table sets forth compensation of the Companys directors, for the year ended December 31, 2021.  Name

Fees Earned orPaid in Cash(1)


StockAwards(2)


All OtherCompensation


TotalInterested DirectorsMichael S. Gross














Bruce Spohler














Independent DirectorsSteven Hochberg

$
63,500










$
63,500David S. Wachter

$
61,000










$
61,000Leonard A. Potter

$
61,000










$
61,000  (1)
For a discussion of the independent directors compensation, see below. (2)
We do not maintain a stock or option plan, non-equity incentive plan or
pension plan for our directors. However, our independent directors have the option to receive all or a portion of the directors fees to which they would otherwise be entitled in the form of shares of our common stock issued at a price per
share equal to the greater of our then current net asset value per share or the market price at the time of payment. No shares were issued to any of our independent directors in lieu of cash during 2021. Our independent directors annual fee is $50,000. The independent directors also receive $1,250 ($500 if participating telephonically)
plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting and $500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended. In addition, the Chairman of the Audit Committee receives an annual fee of $3,750, the
Chairman of the Nominating and Corporate Governance Committee receives an annual fee of $1,250 and the Chairman of the Compensation Committee receives an annual fee of $1,250. Further, we purchase directors and officers liability
insurance on behalf of our directors and officers. In addition, no compensation was paid to directors who are interested persons of the Company as defined in the 1940 Act. Compensation Committee The Compensation
Committee operates pursuant to a charter approved by our board of directors, a copy of which is available on our website at http://www.slrseniorinvestmentcorp.com. The charter sets forth the responsibilities of the Compensation Committee. The
Compensation Committee is responsible for reviewing and recommending for approval to our board of directors the Advisory Agreement and the Administration Agreement. In addition, although we do not directly compensate our executive officers
currently, to the extent that we do so in the future, the Compensation Committee would also be responsible for reviewing and evaluating their compensation and making recommendations to the board of directors regarding their compensation. Lastly, the
Compensation Committee would produce a report on our executive compensation practices and policies for inclusion in our proxy statement if required by applicable proxy rules and regulations and, if applicable, make recommendations to the board of
directors with matters related to compensation generally. The Compensation Committee has the authority to engage compensation consultants and to delegate their duties and responsibilities to a member or to a subcommittee of the Compensation
Committee. The members of the Compensation Committee are Messrs. Hochberg, Wachter and Potter, all of whom are considered independent under the rules of the NASDAQ Stock Market and are not interested persons of the Company as that term
is defined in Section 2(a)(19) of the 1940 Act. Mr. Potter serves as Chairman of the Compensation Committee. Compensation Committee
Interlocks and Insider Participation During fiscal year 2021 none of the Companys executive officers served on the board of
directors (or a compensation committee thereof or other board committee performing equivalent functions) of any entities that  135




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##### Table of Contents

had one or more executive officers serve on the Compensation Committee of the Company or on the Board of Directors of the Company. No member of the Compensation Committee had any relationship
requiring disclosure under any paragraph of Item 404 of Regulation S-K. Compensation Committee Report Currently, none of our executive officers are compensated by the Company, and as such the Company is not required to produce a report on
executive officer compensation for inclusion in our annual report on Form 10-K.  Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of February 25, 2022, the beneficial ownership of each current director, the
nominees for directors, the Companys executive officers, each person known to us to beneficially own 5% or more of the outstanding shares of our common stock, and the executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (SEC) and includes
voting or investment power with respect to the securities. Ownership information for those persons who beneficially own 5% or more of our shares of common stock is based upon reports filed by such persons with the SEC and other information obtained
from such persons, if available. Unless otherwise indicated, the Company believes that each beneficial owner set forth in the table has
voting and investment power and has the same address as the Company. Our address is 500 Park Avenue, New York, New York 10022.  Name and Address of Beneficial Owner

Number of SharesOwned Beneficially(1)


Percentageof Class(2)Interested DirectorsMichael S. Gross(3)(4)


905,122



5.6
%Bruce Spohler(3)


781,671



4.9
%Independent DirectorsSteven Hochberg


20,000



0.1
%Leonard A. Potter


6,250




*David S. Wachter


9,110



0.1
%Executive OfficersRichard L. Peteka


6,250




*Guy Talarico






All executive officers and directors as a group (7 persons)


1,184,929



7.4
%John W. Jordan II(5)


1,428,904



8.9
%JPMorgan Chase & Co.(6)


816,250



5.0
%  *
Represents less than one percent. (1)
Beneficial ownership has been determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act). Assumes no other purchases or sales of our common stock since the most recently available SEC filings. This
assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with respect to the present intent of the beneficial owners of our common stock listed in this table. (2)
Based on a total of 16,049,034 shares of the Companys common stock issued and outstanding as of
February 25, 2022. (3)
Includes 455,500 shares held by Solar Senior Capital Investors, LLC and 100 shares held by SLR Capital
Management, LLC, a portion of both of which may be deemed to be indirectly beneficially owned by  136




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##### Table of Contents

Michael S. Gross and by Bruce Spohler by virtue of their collective ownership interests therein. Also includes 87,874 shares held by Solar Capital Partners Employee Stock Plan LLC, which is
controlled by SLR Capital Partners, LLC. Mr. Gross and Mr. Spohler may be deemed to indirectly beneficially own a portion of the shares held by Solar Capital Partners Employee Stock Plan LLC by virtue of their collective ownership interest
in SLR Capital Partners, LLC. Each of Mr. Gross and Mr. Spohler disclaim beneficial ownership of any shares of our common stock directly held by Solar Capital Partners Employee Stock Plan LLC, Solar Senior Capital Investors, LLC or SLR
Capital Management, LLC, except to the extent of their respective pecuniary interest therein. Also includes 100,000 shares held in a trust of which Bruce Spohler became co-trustee in which he and certain
members of his immediate family are beneficiaries (the Spohler Trust) and 130,697 shares held by a limited liability company in which he holds a pro rata interest (the Spohler LLC). Mr. Spohler disclaims beneficial
ownership of the shares in the Spohler Trust and the Spohler LLC. (4)
Includes (i) 21,844 shares directly held by Michael S. Gross profit sharing plan (the
Profit Sharing Plan), which may be deemed to be directly beneficially owned by Mr. Gross as the sole participant in the Profit Sharing Plan, and (ii) 96,717 shares directly held by a grantor retained annuity trust
(GRAT) setup by and for Michael S. Gross. As the sole trustee of the GRAT, Mr. Gross may be deemed to directly beneficially own all of the shares held by the GRAT. (5)
Based on information contained in Schedule 13G filed on February 21, 2020 by John W. Jordan II.
Includes 1,015,726 shares held by The John W. Jordan II Revocable Trust, a trust formed under the laws of Illinois (the JWJ Trust) and 124,701 shares held by The GSJ 2003 Trust. Mr. Jordan is the trustee of the JWJ Trust and the GSJ
2003 Trust and may be deemed to have voting and dispositive power with respect to the shares of our common stock held by these trusts. The address for Mr. Jordan is 875 North Michigan Avenue, Suite 4020, Chicago, Illinois 60611. (6)
Based on information contained in Schedule 13G filed on January 28, 2022 by JPMorgan Chase &
Co. Such securities are held by certain investment vehicles controlled and/or managed by JPMorgan Chase & Co. or its affiliates. The address for JPMorgan Chase & Co. is 383 Madison Avenue, New York, NY 10179. Set forth below is the dollar range of equity securities beneficially owned by each of our directors as of
February 25, 2022. We are not part of a family of investment companies, as that term is defined in the 1940 Act.  Name of Director

Dollar Range of Equity SecuritiesBeneficially Owned(1)(2)Interested DirectorsMichael S. Gross


Over


$
100,000Bruce Spohler


Over


$
100,000Independent DirectorsSteven Hochberg


Over


$
100,000Leonard A. Potter





$
50,001  $100,000David S. Wachter


Over


$
100,000  (1)
The dollar ranges are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or Over $100,000. (2)
The dollar range of equity securities beneficially owned in us is based on the closing price for our common
stock of $13.63 on February 25, 2022 on the NASDAQ Global Select Market. Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act.  Item 13.
Certain Relationships and Related Transactions, and Director Independence We have entered into the Advisory Agreement with SLR Capital Partners. Mr. Gross, our Chairman,
Co-Chief Executive Officer and President, and Mr. Spohler, our Co-Chief Executive Officer, Chief Operating Officer and board member, are managing members and senior
investment professionals of, and have financial and controlling interests in, SLR Capital Partners. In addition, Mr. Peteka, our Chief Financial Officer, Treasurer and Secretary, serves as the Chief Financial Officer for SLR Capital Partners.  137




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SLR Capital Partners and its affiliates may also manage other funds in the future that may
have investment mandates that are similar, in whole and in part, with ours. For example, SLR Capital Partners presently serves as investment adviser to private funds and managed accounts as well as to SLR Investment Corp., a publicly traded BDC,
which focuses on investing primarily in senior secured loans, unsecured loans and equity securities, SCP Private Credit Income BDC LLC, an unlisted BDC, which focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans and SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to
middle market companies within the healthcare industry. In addition, Michael S. Gross, our Chairman and Co-Chief Executive Officer, Bruce Spohler, our Co-Chief Executive
Officer and Chief Operating Officer, and Richard L. Peteka, our Chief Financial Officer, serve in similar capacities for SLR Investment Corp., SCP Private Credit Income BDC LLC and SLR HC BDC LLC. SLR Capital Partners and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of
those other funds. In such event, depending on the availability of such investment and other appropriate factors, SLR Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with SLR Capital
Partners allocation procedures. Related party transactions may occur among SLR Senior Investment Corp., SLR Healthcare ABL and SLR
Business Credit. These transactions may occur in the normal course of business. No administrative or other fees are paid to SLR Capital Partners by SLR Healthcare ABL or SLR Business Credit. In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also
remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law. Regulatory restrictions limit our
ability to invest in any portfolio company in which any affiliate currently has an investment. The Company obtained its most recent exemptive order from the SEC on June 13, 2017 (the Exemptive Order). The Exemptive Order permits us
to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with SLR
Capital Partners and is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent
factors, and pursuant to the conditions to the Exemptive Order. We believe that it will be advantageous for us to co-invest with funds managed by SLR Capital Partners where such investment is consistent with
the investment objectives, investment positions, investment policies, investment strategy, investment restrictions, regulatory requirements and other pertinent factors applicable to us. We have entered into a license agreement with SLR Capital Partners, pursuant to which SLR Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the names SLR Senior and SOLAR In addition, pursuant to the terms of the Administration Agreement, SLR Capital Management provides us with the
office facilities and administrative services necessary to conduct our day-to-day operations. Board Consideration of the Investment Advisory and Management Agreement Our board of directors determined, at a virtual meeting held on November 3, 2021, to approve the Advisory Agreement between the Company
and SLR Capital Partners. In reliance on certain exemptive relief provided by the SEC in connection with the global COVID-19 pandemic, our board undertook to ratify the Advisory Agreement at its next in-person meeting. In its consideration of the approval of the Advisory Agreement, the board of directors focused on information it had received relating to, among other things:  

the nature, extent and quality of advisory and other services provided by SLR Capital Partners, including
information about the investment performance of the Company relative to its stated  138




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objectives and in comparison to the performance of the Companys peer group and relevant market indices, and concluded that such advisory and other services are satisfactory and the
Companys investment performance is reasonable;  

the experience and qualifications of the personnel providing such advisory and other services, including
information about the backgrounds of the investment personnel, the allocation of responsibilities among such personnel and the process by which investment decisions are made, and concluded that the investment personnel of SLR Capital Partners have
extensive experience and are well qualified to provide advisory and other services to the Company;  

the current fee structure, the existence of any fee waivers, and the Companys anticipated expense ratios in
relation to those of other investment companies having comparable investment policies and limitations, and concluded that the current fee structure is reasonable;  

the advisory fees charged by SLR Capital Partners to the Company, to SLR Investment Corp. and to SCP Private
Credit Income BDC LLC, the advisory fees that will be charged by SLR Capital Partners to SLR HC BDC LLC, and comparative data regarding the advisory fees charged by other investment advisers to business development companies with similar investment
objectives, and concluded that the advisory fees charged by SLR Capital Partners to the Company are reasonable;  

the direct and indirect costs, including for personnel and office facilities, that are incurred by SLR Capital
Partners and its affiliates in performing services for the Company and the basis of determining and allocating these costs, and concluded that the direct and indirect costs, including the allocation of such costs, are reasonable;  

possible economies of scale arising from the Companys size and/or anticipated growth, and the extent to
which such economies of scale are reflected in the advisory fees charged by SLR Capital Partners to the Company, and concluded that some economies of scale may be possible in the future;  

other possible benefits to SLR Capital Partners and its affiliates arising from their relationships with the
Company, and concluded that all such other benefits were not material to SLR Capital Partners and its affiliates; and  

possible alternative fee structures or bases for determining fees, and concluded that the Companys current
fee structure and bases for determining fees are satisfactory. Based on the information reviewed and the discussions
detailed above, the board of directors, including a majority of the directors who are not interested persons as defined in the 1940 Act, concluded that the fees payable to SLR Capital Partners pursuant to the Advisory Agreement were
reasonable, and comparable to the fees paid by other management investment companies with similar investment objectives, in relation to the services to be provided. The board of directors did not assign relative weights to the above factors or the
other factors considered by it. Individual members of the board of directors may have given different weights to different factors. Director
Independence In accordance with rules of the NASDAQ Stock Market, our board of directors annually determines each directors
independence. We do not consider a director independent unless the board of directors has determined that he has no material relationship with us. We monitor the relationships of our directors and officers through a questionnaire each director
completes no less frequently than annually and updates periodically as information provided in the most recent questionnaire changes. Our
governance guidelines require any director who has previously been determined to be independent to inform the Chairman of the board of directors, the Chairman of the Nominating and Corporate Governance  139




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Committee and our Secretary of any change in circumstance that may cause his status as an independent director to change. The board of directors limits membership on the Audit Committee, the
Nominating and Corporate Governance Committee and the Compensation Committee to independent directors. In order to evaluate the
materiality of any such relationship, the board of directors uses the definition of director independence set forth in the rules promulgated by the NASDAQ Stock Market. Rule 5605(a)(2) provides that a director of a BDC, shall be considered to be
independent if he or she is not an interested person of such BDC, as defined in Section 2(a)(19) of the 1940 Act. The
board of directors has determined that each of the directors is independent and has no relationship with us, except as a director and stockholder, with the exception of Michael S. Gross, as a result of his positions as the Co-Chief Executive Officer and President of the Company and a Managing Member of SLR Capital Partners, and Bruce Spohler, as a result of his positions as the Co-Chief
Executive Officer and Chief Operating Officer of the Company and a Managing Member of SLR Capital Partners. Indemnification Agreements We have entered into indemnification agreements with our directors. The indemnification agreements are intended to provide our directors the
maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that SLR Senior shall indemnify the director who is a party to the agreement (an Indemnitee), including the advancement of
legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Maryland law and the 1940
Act.  Item 14.
Principal Accountant Fees and Services KPMG LLP has advised us that neither the firm nor any present member or associate of it has any material financial interest, direct or
indirect, in the Company or its affiliates. Table below in thousands  Fiscal YearEndedDecember 31,2021


Fiscal YearEndedDecember 31,2020Audit Fees

$
294.9


$
271.7Audit-Related Fees






Tax Fees


49.7



48.3All Other Fees


43.0



Total Fees:

$
387.6


$
320.0 Audit Fees: Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and quarterly reviews and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings. Audit-Related Fees: Audit-related services consist of fees billed for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and are not reported under Audit Fees. These services include attest services that are not required by statute or regulation and consultations concerning financial accounting
and reporting standards. Tax Services Fees: Tax services fees consist of fees billed for professional tax services. These services
also include assistance regarding federal, state, and local tax compliance. All Other Fees: Other fees would include fees for
products and services other than the services reported above.  140




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Pre-Approval Policy The Audit Committee has established a pre-approval policy that describes the permitted audit,
audit-related, tax and other services to be provided by KPMG LLP, the Companys independent registered public accounting firm (KPMG). The policy requires that the Audit Committee pre-approve
the audit and non-audit services performed by the independent auditor in order to assure that the provision of such service does not impair the auditors independence. Any requests for audit, audit-related, tax and other services that have not received general
pre-approval must be submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted.
Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval authority to one or
more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not
delegate its responsibilities to pre-approve services performed by the independent registered public accounting firm to management. During the fiscal year ended December 31, 2021, the Audit Committee pre-approved 100% of services described in this policy.  141




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PART IV  Item 15.
Exhibit and Financial Statement Schedules a. Documents Filed as Part of this Report The following reports and consolidated financial statements are set forth in Item 8:  Report of Independent Registered Public Accounting Firm


97Consolidated Statements of Assets 
& Liabilities as of December 31, 2021 and December 31, 2020


99Consolidated Statements of Operations for the years ended December 
31, 2021, 2020 and 2019


100Consolidated Statements of Changes in Net Assets for the years ended December 31,
 2021, 2020 and 2019


101Consolidated Statements of Cash Flows for the years ended December 
31, 2021, 2020 and 2019


102Consolidated Schedules of Investments as of December 
31, 2021 and December 31, 2020


103Notes to Consolidated Financial Statements


109 b. Exhibits The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:  Exhibit
Number

Description2.1

Agreement and Plan of Merger among SLR Investment Corp., SLR Senior Investment Corp., Solstice Merger Sub, Inc. and SLR Capital Partners, LLC
 (for the limited purposes set forth therein), dated as of December 1, 2021(9)3.1

Articles of Amendment and Restatement(1)3.2

Articles of Amendment (8)3.3

Second Amended and Restated Bylaws(9)4.1

Form of Common Stock Certificate(1)4.2

Description of Securities*10.1

Dividend Reinvestment Plan(1)10.2

First Amended and Restated Investment Advisory and Management Agreement by and between Registrant and SLR Capital Partners, LLC (5)10.3

Form of Custody Agreement(4)10.4

Amended and Restated Administration Agreement by and between Registrant and SLR Capital Management, LLC(4)10.5

Form of Indemnification Agreement by and between Registrant and each of its directors(1)10.6

First Amended and Restated Trademark License Agreement by and between Registrant and SLR Capital Partners, LLC(8)10.7

Form of Share Purchase Agreement by and between Registrant and Solar Senior Capital Investors, LLC(1)10.8

Form of Amendment No. 1 to Share Purchase Agreement by and between Registrant and Solar Senior Capital Investors, LLC(2)  142




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Exhibit
Number

Description10.9

Form of Contribution Agreement, dated as of August 
26, 2011, by and between SUNS SPV LLC, as the contributee, and SLR Senior Investment Corp., as the contributor(3)10.10

Form of Loan and Servicing Agreement, dated as of August 26, 2011 (as amended through the Sixth Amendment dated as of June 
1, 2018), by and among the Registrant, as the servicer and the transferor, SUNS SPV LLC, as the borrower, each of the conduit lenders from time to time party thereto, each of the liquidity banks from time to time party thereto, each of the lender agents
 from time to time party thereto, Citibank, N.A., as the administrative agent and collateral agent, and Wells Fargo Bank, N.A., as the account bank, the backup servicer and the collateral custodian(6)14.1

Code of Ethics(7)14.2

Code of Business Conduct(4)21.1

Subsidiaries of SLR Senior Investment Corp.*23.1

Consent of Independent Registered Public Accounting Firm*23.2

Consent of Independent Registered Public Accounting Firm*23.3

Consent of Independent Registered Public Accounting Firm*31.1

Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*31.2

Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*31.3

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*32.1

Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*32.2

Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*32.3

Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*99.1

Gemino Healthcare Finance, LLC and Subsidiary Consolidated Financial Statements years ended December 31, 2021 and December 31, 2020*99.2

North Mill Holdco LLC and Subsidiaries Consolidated Financial Report years ended December 31, 2021 and December 31, 2020*99.3

Report of Independent Registered Public Accounting Firm on Supplemental Information*  (1)
Previously filed in connection with SLR Senior Investment Corp.s registration statement on Form N-2 (File No. 333-171330) filed on February 14, 2011. (2)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 10-K filed on February 22, 2012. (3)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 8-K filed on August 31, 2011. (4)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 10-K filed on February 25, 2014. (5)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 10-Q filed on August 2, 2016.  143




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(6)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 10-Q filed on August 6, 2018. (7)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 10-K filed on February 24, 2021. (8)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 8-K filed on February 25, 2021. (9)
Previously filed in connection with SLR Senior Investment Corp.s report on Form 8-K filed on December 1, 2021. *
Filed herewith. c. Consolidated Financial Statement Schedules Separate Financial Statements of Subsidiaries Not Consolidated: Consolidated Financial Statements for Gemino Healthcare Finance, LLC and Subsidiary year ended December 31, 2021 and December 31,
2020 are attached as Exhibit 99.1 hereto. Consolidated Financial Statements for North Mill Holdco LLC year ended December 31, 2021 and December 31, 2020 are attached as Exhibit 99.2 hereto.  Item 16.
Form 10-K Summary None.  144




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.  SLR SENIOR INVESTMENT CORP./s/    MICHAEL S. GROSS



/s/    BRUCE J. SPOHLERMichael S. Gross
Co-Chief Executive Officer, President, Chairman of the Board and
Director Date: March 1, 2022



Bruce J. Spohler
Co-Chief Executive Officer, Chief Operating Officer and
Director Date:
March 1, 2022 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacity and on the dates indicated.  Date

Signature

TitleMarch 1, 2022

/s/    MICHAEL S. GROSS
Michael S. Gross

Co-Chief Executive Officer, President, Chairman of the Board and Director (Principal Executive Officer)March 1, 2022

/s/    BRUCE J. SPOHLER
Bruce J. Spohler

Co-Chief Executive Officer, Chief Operating Officer and Director (Principal Executive Officer)March 1, 2022

/s/    STEVEN HOCHBERG
Steven Hochberg

DirectorMarch 1, 2022

/s/    DAVID S. WACHTER
David S. Wachter

DirectorMarch 1, 2022

/s/    LEONARD A. POTTER
Leonard A. Potter

DirectorMarch 1, 2022

/s/    RICHARD L. PETEKA
Richard L. Peteka

Chief Financial Officer (Principal Financial Officer) and Secretary  145